DEBTOR-IN POSSESSION
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 25, 1995
by and among
WEI HOLDINGS, INC.,
as Debtor-in-Possession,
WHEREHOUSE ENTERTAINMENT, INC.,
and
BANKERS TRUST COMPANY,
as Agent
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Dated as of September 25, 1995
TABLE OF CONTENTS
Page
RECITALS.................................................... 1
SECTION 1. DEFINITIONS..................................... 2
1.1 Certain Defined Terms........................... 2
1.2 Accounting Terms; Utilization of GAAP........... 18
1.3 References; Interpretation...................... 18
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS...... 19
2.1 Loans........................................... 19
2.2 Interest on the Loans........................... 21
2.3 Fee............................................. 25
2.4 Prepayments and Payments; Reductions in
Commitments.................................. 25
2.5 Use of Proceeds................................. 27
2.6 Special Provisions Governing Eurodollar
Rate Loans................................... 28
2.7 Capital Adequacy Adjustment..................... 32
2.8 Letters of Credit............................... 33
2.9 Taxes........................................... 40
2.10 Superpriority of Obligations.................... 41
2.11 Replacement of Lenders.......................... 42
SECTION 3. CONDITIONS TO LOANS AND LETTERS OF CREDIT....... 42
3.1 Conditions to Loans............................. 42
3.2 Conditions to All Loans......................... 45
3.3 Conditions to Letters of Credit................. 46
SECTION 4. REPRESENTATIONS AND WARRANTIES.................. 47
4.1 Organization, Powers, Good Standing,
Business and Subsidiaries.................... 47
4.2 Authorization of Borrowing, etc................. 47
4.3 Financial Condition............................. 48
4.4 No Material Adverse Change; No Stock Payments... 49
4.5 Title to Properties; Liens...................... 49
4.6 Litigation; Adverse Facts....................... 49
4.7 Payments of Taxes............................... 50
4.8 Materially Adverse Agreements; Performance
of Agreements................................ 50
4.9 Governmental Regulation......................... 50
4.10 Securities Activities........................... 51
i
Page
4.11 Employee Benefit Plans.......................... 51
4.12 Disclosure...................................... 51
4.13 Licenses, Permits and Authorizations............ 52
4.14 Intangible Property............................. 52
4.15 Environmental Matters........................... 52
SECTION 5. AFFIRMATIVE COVENANTS........................... 54
5.1 Financial Statements and Other Reports.......... 54
5.2 Corporate Existence, etc........................ 58
5.3 Payment of Taxes and Claims; Tax Consolidation.. 58
5.4 Maintenance of Properties; Insurance............ 59
5.5 Inspection; Lender Meeting...................... 59
5.6 Equal Security for Obligations; No Further
Negative Pledges............................. 59
5.7 Compliance with Laws, etc....................... 60
5.8 Environmental Disclosure and Inspection......... 60
5.9 Hazardous Materials; Remedial Action............ 61
SECTION 6. NEGATIVE COVENANTS.............................. 61
6.1 Indebtedness.................................... 62
6.2 Liens........................................... 62
6.3 Investments..................................... 63
6.4 Contingent Obligations.......................... 63
6.5 Restricted Junior Payments; Payments on
Pre-Petition Obligations..................... 64
6.6 Financial Covenants............................. 64
6.7 Restriction on Fundamental Changes.............. 65
6.8 Sales and Leasebacks............................ 66
6.9 Sale or Discount of Receivables................. 66
6.10 Transactions with Shareholders and Affiliates... 66
6.11 Disposal of Subsidiary Stock.................... 67
6.12 Conduct of Business; Limitation on
Subsidiaries................................. 67
6.13 Chapter 11 Claims............................... 67
SECTION 7. GUARANTY OF HOLDINGS............................ 68
7.1 Guaranty by Holdings............................ 68
7.2 Terms of Guaranty............................... 68
SECTION 8. EVENTS OF DEFAULT............................... 71
8.1 Failure to Make Payments When Due............... 71
8.2 Breach of Certain Covenants..................... 71
8.3 Breach of Warranty.............................. 71
8.4 Other Defaults Under Agreement or
Loan Documents............................... 72
8.5 Judgments and Attachments....................... 72
8.6 Employee Benefit Plans.......................... 72
8.7 Change in Control............................... 72
8.8 Material Adverse Effect......................... 73
8.9 Bankruptcy Proceeding Events.................... 73
ii
Page
SECTION 9. AGENT........................................... 75
9.1 Appointment..................................... 75
9.2 Powers; General Immunity........................ 75
9.3 Representations and Warranties; No Responsibility
For Appraisal of Creditworthiness............ 77
9.4 Right to Indemnity.............................. 77
9.5 Registered Persons Treated as Owner............. 77
9.6 Successor Agents................................ 78
SECTION 10. MISCELLANEOUS................................... 78
10.1 Representation of Lenders....................... 78
10.2 Assignments and Participants in Loans;
Letters of Credit............................ 78
10.3 Expenses........................................ 79
10.4 Indemnity....................................... 80
10.5 Set Off......................................... 81
10.6 Ratable Sharing................................. 82
10.7 Amendments and Waivers.......................... 82
10.8 Independence of Covenants....................... 83
10.9 Notices......................................... 83
10.10 Survival of Warranties and Certain Agreements... 83
10.11 Failure or Indulgence Not Waiver; Remedies
Cumulative................................... 83
10.12 Obligations Several; Independent Nature
of Lenders' Rights........................... 84
10.13 Headings; Table of Contents..................... 84
10.14 Applicable Law.................................. 84
10.15 Successors and Assigns; Subsequent Holders
of Notes..................................... 84
10.16 Consent to Jurisdiction and Service of Process.. 84
10.17 Waiver of Jury Trial............................ 85
10.18 Parties Including Trustees; Court Proceedings... 85
10.19 Counterparts; Effectiveness..................... 86
10.20 Absence of Prejudice to Lenders or to Holders
of Debt Under the Prepetition Credit Agreement
with Respect to Matters Before the
Bankruptcy Court............................. 86
iii
EXHIBITS
I Form of Notice of Borrowing
II Form of Notice of Issuance of Letter of Credit
III Form of Notice of Conversion/Continuation
IV Form of Note
V Form of Borrowing Base Certificate
VI Form of Compliance Certificate
VII Form of Assignment Agreement
VIII Form of Opinion of Loan Parties' Counsel
IX Form of Interim Borrowing Order
X Form of Final Borrowing Order
iv
SCHEDULES
1.1A Fiscal Periods
1.1B Lenders' Commitments and Pro Rata Shares
4.1B Foreign Qualifications
4.1D Subsidiaries
4.4 Certain Material Events
4.6 Litigation
4.11 Employee Benefits
4.14 Trademarks and Trade Names
4.15 Environmental Matters
6.2 Existing Liens
6.3 Existing Investments
v
This DEBTOR-IN-POSSESSION CREDIT AGREEMENT is dated as
of September 25, 1995 and entered into by and among WHEREHOUSE
ENTERTAINMENT, INC., a Delaware corporation, as debtor and
debtor-in-possession ("Borrower"), WEI HOLDINGS, INC., a Delaware
corporation, as debtor and debtor-in-possession ("Holdings"), the
LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (together with each
lender that may become a party to this Debtor-in-Possession
Credit Agreement as herein provided, referred to herein indivi-
dually as a "Lender" and collectively as "Lenders"), BANKERS
TRUST COMPANY, as agent for Lenders (hereinafter, in such
capacity, together with any successors thereto in such capacity,
referred to as "Agent").
RECITALS
WHEREAS, on August 2, 1995, Borrower and Holdings filed
voluntary petitions for relief under the Bankruptcy Code (as
hereinafter defined) with the United States Bankruptcy Court for
the District of Delaware (the "Court") (such proceedings jointly
administered as Case No. 95-911 (HSB), are hereinafter referred
to as the "Chapter 11 Cases"), and Borrower and Holdings each
continues to operate its business and manage its properties as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code;
WHEREAS, Borrower has requested Lenders to provide,
subject to the terms and conditions contained herein, a revolving
credit facility of up to $30,000,000 (including a letter of
credit subfacility of $10,000,000) to fund working capital, issue
letters of credit and make certain other payments during the
Chapter 11 Cases, all as set forth herein and Lenders are willing
to extend such postpetition credit to Borrower in accordance with
and on the terms and conditions set forth herein; and
WHEREAS, Holdings is willing to guaranty all of the
obligations of Borrower with respect to the credit facilities
provided by Agent and Lenders and such guaranty is a condition
precedent to the making of Loans and other extensions of Credit
hereunder.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Holdings, Borrower, Lenders and Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have
the following meanings:
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date, the rate (rounded upward to the next highest
one hundredth of one percent) obtained by dividing (i) the
Eurodollar Rate for that date by (ii) a percentage equal to 100%
minus the stated maximum rate of all reserves required to be
maintained against "Eurocurrency liabilities" as specified in
Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined or any category of extensions
of credit or other assets that includes loans by a non-United
States office of a Lender to United States residents).
"Affected Lender" means any Lender affected by any of
the events described in subsections 2.6B or 2.6C.
"Affiliate", as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For the purposes of this
definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introductory paragraph to this Agreement.
"Aggregate Amounts Due" has the meaning assigned to
that term in subsection 10.6.
"Agreement" means this Debtor-in-Possession Credit
Agreement as it may be amended, amended and restated, supple-
mented or otherwise modified from time to time.
"Asset Sale" means the sale, lease, assignment or other
transfer for value by Holdings or any of its Subsidiaries to any
Person, whether in a single transaction or a series of related
transactions, of (i) any of the stock of Borrower or any of its
Subsidiaries, (ii) all or substantially all of the assets of any
division or line of business of Holdings or any of its Subsidi-
aries, or (iii) any other assets or rights, or related group of
assets or rights, of Holdings or any of its Subsidiaries (x)
having a book value or market value in excess of $150,000, other
than the rental or sale in the ordinary course of business of
Inventory of Holdings or any of its Subsidiaries.
"Bankers" means Bankers Trust Company, a New York
banking corporation.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy" from time to time in effect, or any
successor statute.
"Bankruptcy Rule" means a rule promulgated as part of
the Federal Rules of Bankruptcy Procedure.
"Base Rate" means, at any time, the higher of (a) the
Prime Rate and (b) the rate which is 1/2 of 1% in excess of the
Federal Funds Effective Rate.
"Base Rate Loans" means Loans made by Lenders bearing
interest at rates determined by reference to the Base Rate as
provided in subsection 2.2A.
"Borrower" has the meaning assigned to that term in the
introductory paragraph to this Agreement.
"Borrowing Base" means, as at any date of determina-
tion, fifty percent (50%) of Eligible Inventory.
"Borrowing Base Certificate" means a certificate
substantially in the form of Exhibit IV annexed hereto delivered
to Agent and Lenders by Borrower pursuant to subsection 5.1(iv).
"Borrowing Orders" means the Interim Borrowing Order
and the Final Borrowing Order.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday
and any day which either is a legal holiday under the laws of the
State of New York or the State of California or is a day on which
banking institutions located in any such state are authorized or
required by law or other governmental action to close, and (ii)
with respect to all notices, determinations, fundings and
payments in connection with the Eurodollar Rate, any day that is
a Business Day described in clause (i) and that is also a day for
trading by and between banks in Dollar deposits in the applicable
interbank Eurodollar market.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by that
Person as lessee that, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of that Person.
"Cash Equivalents" means (i) marketable direct obliga-
tions issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
and (iii) demand or time deposits or bankers' acceptances
maturing within one year from the date of acquisition thereof
issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than
$500,000,000 or by any original Lender.
"Certificate of Exemption" has the meaning assigned to
that term in subsection 2.9B.
"Chapter 11 Cases" has the meaning assigned to that
term in the recitals hereto.
"Closing Date" the date on or before October 31, 1995
on which the conditions contained in Section 3 are satisfied.
"Commercial Letter of Credit" means any letter of
credit or similar instrument issued for the purpose of providing
the primary payment mechanism in connection with the purchase of
any materials, goods or services by Borrower in the ordinary
course of business.
"Commitments" means the commitments of Lenders as set
forth in subsections 2.1A and 2.8C.
"Compliance Certificate" means a certificate substan-
tially in the form annexed hereto as Exhibit V delivered to Agent
and Lenders by Holdings and Borrower pursuant to subsection
5.1(v).
"Consolidated Adjusted EBITDAV" means, for any period,
the sum (without duplication) of (i) Consolidated Net Income,
(ii) provisions for taxes based on income, (iii) Consolidated
Interest Expense, (iv) to the extent Consolidated Net Income has
been reduced thereby, amortization expense, depreciation expense,
the non-cash portion of cost of rentals and other non-cash
expenses, (v) losses on Asset Sales and (vi) other non-cash items
reducing Consolidated Net Income, excluding write-offs of
Inventory and accounts receivable, less the sum (without duplica-
tion) of (x) gains on Asset Sales, (y) other non-cash items
increasing Consolidated Net Income and (z) cash purchases of
rental inventory, all as determined on a consolidated basis for
Holdings and its Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" means, for any
period, the aggregate of all expenditures (whether in cash or
accrued as liabilities) by Holdings and its Subsidiaries during
such period that, in conformity with GAAP, are included or
required to be included in the property, plant or equipment
reflected in the consolidated balance sheet of Holdings and its
Subsidiaries; provided, however, that excluded from this defini-
tion shall be (i) any expenditures made with insurance proceeds
received by Borrower with respect to any item included in the
property, plant or equipment reflected in the consolidated
balance sheet of Holdings and its Subsidiaries and (ii) any
expenditures made with, or reimbursed by, Consolidated Trade
Reimbursements.
"Consolidated Interest Expense" means, for any period,
interest expense with respect to all outstanding Indebtedness
(including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit) of
Holdings and its Subsidiaries for such period determined on a
consolidated basis in conformity with GAAP; provided that
Consolidated Interest Expense shall not include any Transaction
Costs and amortization thereof.
"Consolidated Net Income" means, for any period, the
net income (or loss) of Holdings and its Subsidiaries, after
provisions for taxes, on a consolidated basis for such period
taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or
loss) of any Person (other than a Subsidiary of Holdings), except
to the extent of the amount of dividends or other distributions
actually paid in cash to Holdings or any of its Subsidiaries by
such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of
Holdings or is merged into or consolidated with Holdings or any
of its Subsidiaries or that Person's assets are acquired by
Holdings or any of its Subsidiaries, and (iii) the income of any
Subsidiary of Holdings (other than Borrower) to the extent that
the declaration or payment of dividends or similar distributions
by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instru-
ment, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary.
"Consolidated Operating Lease Expense" means, for any
period of determination, the aggregate amount of all rents paid
by Holdings and its Subsidiaries on a consolidated basis during
such period under all Operating Leases of Holdings and its
Subsidiaries.
"Consolidated Trade Reimbursements" means, for any
period, the aggregate amount of payments, including without
limitation, any credits or rebates received by Borrower in
connection with the purchase of Inventory, received from vendors
on account of capital expenditures made or to be made by
Borrower.
"Contingent Obligation", as applied to any Person,
means, without duplication, any direct or indirect liability,
contingent or otherwise, of that Person (i) with respect to any
indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of
such obligation of another that such obligation of another will
be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect
thereof or (ii) with respect to any letter of credit issued for
the account of that Person or as to which that Person is other-
wise liable for reimbursement of drawings. Contingent Obliga-
tions shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (other than for collection or
deposit in the ordinary course of business), co-making, discount-
ing with recourse or sale with recourse by such Person of the
obligation of another, (b) any Interest Rate Agreement and (c)
any liability of such Person for the obligations of another
through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), (y) to maintain
the solvency or any balance sheet item, level of income or
financial condition of another, or (z) to make take-or-pay or
similar payments if required regardless of non-performance by any
other party or parties to an agreement, if in the case of any
agreement described under subclauses (x) or (y) of this sentence
the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation to the extent so
guaranteed or otherwise supported.
"Contractual Obligation", as applied to any Person,
means any provision of any security issued by that Person or of
any material indenture, mortgage, deed of trust, contract, under-
taking, agreement or other instrument to which that Person is a
party or by which it or any material amount of its properties is
bound or to which it or any material amount of its properties is
subject.
"Court" has the meaning assigned to that term in the
recitals hereto.
"Creditors' Committee" means the official committee of
unsecured creditors appointed in the Chapter 11 Cases.
"Dollars" and the sign "$" means the lawful money of
the United States of America.
"Eligible Inventory" means, as at any date of deter-
mination, 65% of the value (determined at the lower of cost or
market on a first-in, first-out basis less reserves taken by
Borrower in its books and records (determined in a manner
consistent with Borrower's historic practices) and less unicap
costs) of all Inventory (excluding all Inventory acquired by
Borrower principally for rental, all Inventory held, or claimed
to be held, on consignment or similar arrangement and all
Inventory produced in violation of the Fair Labor Standards Act
or subject to the so-called "hot goods" provisions contained in
Title 29 U.S.C. 215(a)(i)) owned by and in the possession of
Borrower and located in the United States of America.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is or was
maintained or contributed to by Holdings or any of its ERISA
Affiliates other than a Multiemployer Plan.
"Environmental Claim" means any written notice of
violation, claim, demand or other order or direction (conditional
or otherwise) by any governmental authority or any Person for
personal injury (including sickness, disease or death), tangible
or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions,
resulting from or based upon (i) the existence, or the continua-
tion of the existence, of a Release (whether sudden or non-sudden
or accidental or non-accidental), of, or exposure to, any
Hazardous Material, in, into or onto the environment at, in, by,
from or related to any Facility, (ii) the transportation,
storage, treatment or disposal of Hazardous Materials in connec-
tion with the operation of any Facility, or (iii) the violation,
or alleged violation, of any statutes, ordinances, orders, rules,
regulations, permits or licenses of or from any governmental
authority, agency or court relating to Hazardous Materials with
respect to the Facilities.
"Environmental Laws" means all laws relating to fines,
orders, injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials and to the
generation, storage, transportation, or disposal of Hazardous
Materials, in any manner applicable to Holdings or any of its
Subsidiaries or any or their respective properties, including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.) and the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), each as amended or supplemented, and any analogous future
or present local, state and federal statutes and regulations
promulgated pursuant thereto, each as in effect as the date of
determination.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor
statute.
"ERISA Affiliate", as applied to any Person, means (i)
any corporation which is a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal
Revenue Code of which that Person is a member; (ii) any trade or
business (whether or not incorporated) which is a member of a
group of trade or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which
that Person is a member; and (iii) any member of an affiliated
service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described
in clause (ii) above is a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan which is not subject
to the provision for waiver of the 30-day notice requirement to
the PBGC; (ii) the failure to meet the minimum funding standard
of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make on
its due date a required installment under Section 412(m) of the
Internal Revenue Code with respect to any Pension Plan which
would result in the imposition of a Lien under Section 412(n) of
the Code if "$750,000" were substituted for "$1,000,000" in
Section 412(n) of the Code or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2)
of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Holdings or any of its ERISA Affiliates from
any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability
pursuant to Sections 4063 or 4064 or ERISA; (v) the institution
by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute
grounds under ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan; (vi) the imposition of
liability on Holdings or any of its ERISA Affiliates pursuant to
Sections 4062(e) or 4069 of ERISA or by reason of the application
of Section 4212(c) of ERISA; (vii) the withdrawal of Holdings or
any of its ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor,
or the receipt by Holdings or any of its ERISA Affiliates of
notice from any Multiemployer Plan that it is in reorganization
or insolvency pursuant to Sections 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Sections 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which
could give rise to the imposition on Holdings or any of its ERISA
Affiliates of any material fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under
Sections 409, 502(c), (i) or (l) or 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the assertion of a material claim
(other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Holdings or any of its ERISA Affiliates in
connection with any such plan which could reasonably be expected
to be successful; or (x) receipt from the IRS of notice of the
failure of any Pension Plan to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan to fail to qualify for exemption from
taxation under Section 401(a) of the Internal Revenue Code if the
resulting fines, penalties and related charges could reasonably
be expected to be material; or (xi) the imposition of a Lien
pursuant to Sections 401(a)(29) or 412(n) of the Internal Revenue
Code or pursuant to ERISA; provided that any event described in
the foregoing clauses shall not be an ERISA Event if Holdings
and/or its Subsidiaries are (or would be) liable for any
potential liability resulting from such event solely because of
their affiliation with an ERISA Affiliate (excluding Holdings and
all Subsidiaries) and (a) such events, individually or in the
aggregate, result in or could reasonably be expected to result in
liability (including joint and several liability) of Holdings and
its Subsidiaries of less than $1,000,000, or (b) neither Holdings
nor any Subsidiary could reasonably be expected to be liable
(either individually or on a joint and several basis) for any
potential liability resulting from such event, provided further
that any event described in the foregoing proviso shall be an
ERISA Event if the PBGC or any other governmental authority
notifies Holdings or one of its Subsidiaries that Holdings or one
of its Subsidiaries is liable for any potential liability in
excess of $1,000,000 resulting from such event.
"Eurodollar Rate" means, for any Interest Rate Deter-
mination Date, the offered quotation, if any, to first class
banks in the Eurodollar market by Bankers for Dollar deposits of
amounts in immediately available funds comparable to the princi-
pal amount of the Eurodollar Rate Loan of Bankers for which the
Eurodollar Rate is being determined with maturities comparable to
the Interest Period for which such Eurodollar Rate will apply as
of approximately 10:00 A.M. (New York time) two (2) Business Days
prior to the commencement of such Interest Period.
"Eurodollar Rate Loans" means Loans bearing interest at
rates determined by reference to the Eurodollar Rate as provided
in subsection 2.2A.
"Event of Default" means each of the events set forth
in Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Expiry Date" means the earliest of (i) if the Final
Order has not been entered by October 31, 1995, October 31, 1995,
(ii) September 1, 1997 and (iii) the effective date of a plan of
reorganization for Borrower and Holdings in the Chapter 11 Cases.
"Facilities" means, as at any date of determination,
any and all real property (including all buildings, fixtures or
other improvements located thereon) owned, leased or operated by
Holdings or any of its Subsidiaries as at such date.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by
Agent from three Federal funds brokers of recognized standing
selected by Agent.
"Final Borrowing Order" means an order of the Court
entered in the Chapter 11 Cases after a final hearing under
Bankruptcy Rule 4001(c)(2) in the form attached hereto as Exhibit
X with any modifications approved by Agent in its sole discre-
tion. The Final Borrowing Order shall also contain a finding
consistent with the representation of Borrower set forth in
subsection 4.2A(ii).
"Fiscal Month" means a fiscal month of Holdings and its
Subsidiaries as set forth in Schedule 1.1A.
"Fiscal Quarter" means a fiscal quarter of Holdings and
its Subsidiaries as set forth in Schedule 1.1A annexed hereto.
"Fiscal Year" means the fiscal year of Holdings and its
Subsidiaries as set forth in Schedule 1.1A annexed hereto.
"Foreign Lender" shall have the meaning assigned that
term in subsection 2.9B.
"Funded Debt", as applied to any Person, means all
Indebtedness of that Person which by its terms or by the terms of
any instrument or agreement related thereto has a final stated
maturity which is more than one year from, or is directly
renewable or extendable at the option of the debtor to a date
more than one year from (including an option of the debtor under
a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of one year or more from),
the date of the creation thereof.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the
accounting profession, that are applicable to the circumstances
as of the date of determination.
"Government Acts" has the meaning assigned thereto in
subsection 2.8H.
"Guarantor" has the meaning assigned thereto in
subsection 7.1.
"Guaranty" has the meaning assigned thereto in
subsection 7.1.
"Hazardous Materials" means (i) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, any flammable substances or explosives,
any radioactive materials, any hazardous wastes or substances,
any toxic wastes or substances or any other materials or pollu-
tants which (a) pose a hazard to any property of Holdings or any
of its Subsidiaries or to Persons on or about such property or
(b) cause such property to be in violation of any Environmental
Laws, (ii) asbestos in any form which is or could become friable,
urea formaldehyde foam insulation, electrical equipment which
contains any oil or dielectric fluid containing levels of poly-
chlorinated biphenyls in excess of fifty parts per million; (iii)
any chemical, material or substance defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or words of similar
import under any applicable local, state or federal law or under
the regulations adopted or publications promulgated pursuant
thereto, including, without limitation, Environmental Laws, and
(iv) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority
having jurisdiction over Holdings or any of its Subsidiaries or
any of their respective properties.
"Holdings" has the meaning assigned to that term in the
introductory paragraph of this Agreement.
"Indebtedness", as applied to any Person, means,
without duplication, (i) all indebtedness for borrowed money
whether or not evidenced by a promissory note, draft or similar
instrument, (ii) that portion of obligations with respect to
Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, (iii) notes payable and
drafts accepted representing extensions of credit, (iv) any
obligation owed for all or any part of the deferred purchase
price of property or services (other than any obligation imposed
by law under ERISA), which purchase price is due more than six
months from the date of incurrence of the obligation in respect
thereof, and (v) all indebtedness to the extent secured by any
Lien on any property or asset owned or held by that Person
regardless of whether such indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit
of that Person.
"Initial Borrowing Date" has the meaning assigned to
that term in Section 3.1.
"Interest Payment Date" means with respect to any
Eurodollar Rate Loan the last day of each Interest Period
applicable to such Loan; provided that in the case of each
Interest Period in excess of three months, "Interest Payment
Date" shall also mean each Interest Period Anniversary Date for
such Interest Period.
"Interest Period" means any interest period applicable
to a Loan as determined pursuant to subsection 2.2B.
"Interest Period Anniversary Date" means for each
Interest Period which is in excess of three months, each three-
month anniversary of the commencement of that Interest Period.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement designed to
protect Holdings or any of its Subsidiaries against fluctuations
in interest rates with respect to the Obligations; provided that
the calculation of payments for early termination shall be made
on a commercially reasonable basis in accordance with industry
practice.
"Interest Rate Determination Date" means each date for
calculating the Eurodollar Rate for purposes of determining the
interest rate in respect of an Interest Period. The Interest
Rate Determination Date shall be the second Business Day prior to
the first day of the related Interest Period for a Eurodollar
Rate Loan.
"Interim Borrowing Order" means an order of the Court
entered in the Chapter 11 Cases after an interim hearing under
Bankruptcy Rule 4001(c)(2) in the form attached hereto as Exhibit
IX with any modifications approved by Agent in its sole discre-
tion. The Interim Borrowing Order shall also contain a finding
consistent with the representation of Borrower set forth in
subsection 4.2A(ii).
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter and any successor statute.
"Inventory" means all goods, merchandise and other
personal property which are held for sale or rental by Borrower,
including those held for display or demonstration or out on
lease, rental or to be furnished under a contract of service, or
are raw materials, components, work in process or materials used
or consumed, or to be used or consumed in the business of
Borrower.
"Investment", as applied to any Person, means any
direct or indirect purchase or other acquisition by that Person
of, or of a beneficial interest in, stock or other Securities of
any other Person, or any direct or indirect loan, advance (other
than advances to employees for moving and travel expenses,
drawing accounts and similar expenditures made in the ordinary
course of business) or capital contribution by that Person to any
other Person, including all indebtedness and accounts receivable
from that other Person that are not current assets or did not
arise from sales of goods or services to that other Person in the
ordinary course of business. The amount of any Investment shall
be the original cost of such Investment plus the cost of all
additions thereto and minus the amount of any portion of such
Investment repaid to such Person in cash as a return of capital,
but without any other adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to
such Investment.
"Issuing Lender" means, with respect to any Letter of
Credit, Agent or any Lender that issues such Letter of Credit,
determined as provided in subsection 2.8; provided that, notwith-
standing anything to the contrary contained herein, any Letter of
Credit may be issued by an Affiliate of Agent or any Lender;
provided, further, that to the extent that a Letter of Credit is
issued by an Affiliate of Agent or any Lender, such Person shall,
for all purposes under this Agreement, the Loan Documents and all
other instruments and documents referred to herein and therein be
deemed to be the "Issuing Lender" with respect to such Letter of
Credit.
"Lender" and "Lenders" have the meanings assigned to
such terms in the introduction to this Agreement; provided that
"Lender" and "Lenders" shall also include the successors and
permitted assignees of Lenders pursuant to subsections 2.8 and
10.2.
"Letter of Credit" means any of the letters of credit
issued or to be issued by Issuing Lenders for the account of
Borrower pursuant to subsection 2.8 and for the purposes
described in subsection 2.5B.
"Letter of Credit Usage" means, with respect to any
Letter of Credit, as at any date of determination, the sum of (i)
the maximum aggregate amount which is or at any time thereafter
may become available for drawing under such Letter of Credit then
outstanding plus (ii) the aggregate amount of all drawings under
such Letter of Credit honored by any Issuing Lender and not
theretofore reimbursed by Borrower.
"Letter of Non-Exemption" has the meaning assigned to
that term in subsection 2.9B.
"Lien" means any lien, mortgage, deed of trust, deed to
secure debt, pledge, security interest, charge or encumbrance of
any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to
give any security interest).
"Loan" or "Loans" means the loans made by Lenders to
Borrower pursuant to subsections 2.1A and 2.8C.
"Loan Documents" means this Agreement, the Letters of
Credit, the Guaranty and any Notes issued by Borrower.
"Loan Party" means either of Holdings or Borrower.
"Margin Stock" has the meaning assigned to that term in
Regulations G and U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets,
prospects or condition (financial or otherwise) of Holdings and
its Subsidiaries taken as a whole or (ii) the material impairment
of the ability of any Loan Party to perform its obligations under
any Loan Document or of Agent or any Lender to enforce or collect
the Obligations, including the obligation of any Loan Party to
perform its guaranty of the Obligations.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 3(37) of ERISA to which Holdings or any of its
ERISA Affiliates is contributing or ever has contributed or to
which Holdings or any of its ERISA Affiliates has, or ever has
had, an obligation to contribute.
"1986 Subordinated Debt" means those certain 6-1/4%
Convertible Subordinated Debentures due July 1, 2006 issued by
Borrower pursuant to the 1986 Subordinated Indenture.
"1986 Subordinated Indenture" means that certain
Indenture dated June 15, 1986 between Borrower and Bank of
America National Trust and Savings Association, as trustee, as
supplemented by the First Supplemental Indenture dated February
11, 1988 pursuant to which the 1986 Subordinated Debt has been
issued and sold.
"Notes" means a promissory note of Borrower issued
pursuant to subsection 2.2H or Section 10.2 and substantially in
the form of Exhibit IV annexed hereto.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit I annexed hereto with respect to a proposed
borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit III annexed hereto with
respect to a proposed conversion or continuation.
"Notice of Issuance of Letter of Credit" means a
request substantially in the form of Exhibit II annexed hereto
with respect to a proposed issuance of a Letter of Credit.
"Obligations" means all obligations of every nature of
Holdings and/or Borrower and their respective Subsidiaries from
time to time owed to Agent, Lenders, Issuing Lenders or any of
them under this Agreement, the Notes or any of the other Loan
Documents or reimbursement obligations with respect to the
Letters of Credit and all interest thereon or for fees or
expenses, reimbursements and indemnifications and other amounts
due or to become due hereunder or thereunder. Time is of the
essence in the performance of all Obligations, except as other-
wise expressly provided in this Agreement.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such corporation
by its Chairman of the Board (if an officer) or its President or
one of its Vice Presidents and by its Chief Financial Officer or
its Treasurer or its Controller; provided that any Officers'
Certificate required to be delivered by any Loan Party on the
Closing Date may be executed on behalf of such Loan Party by any
one of the foregoing officers; and provided, further, that every
Officers' Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall
include (i) a statement that the officer or officers making or
giving such Officers' Certificate have read such condition and
any definitions or other provisions contained in this Agreement
and the other Loan Documents relating thereto, (ii) a statement
that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to
whether or not such condition has been complied with, and (iii) a
statement as to whether, in the opinion of the signers, such
condition has been complied with; provided further, however, that
no officer signing any Officers' Certificate (including any
Borrowing Base Certificate or Compliance Certificate) shall have
personal liability for any claim based on (i) any statement of
fact believed by such officer in good faith to be accurate and
complete or (ii) any statement that is, or is based on, any
matter of law.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property (whether
real, personal or mixed) that is not a Capital Lease other than
any such lease under which that Person is the Lessor.
"Payment Notice" has the meaning assigned to that term
in Section 8.
"PBGC" means the Pension Benefit Guaranty Corporation
(or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of
Liens (other than any Lien imposed pursuant to Section 401(a)(29)
or 412(n) of the Code or by ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not at the time
required by subsection 5.3;
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-
money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) Liens related to consignment sales made by
the consignors identified in the "Motion for Order Author-
izing Debtor to Honor Pre-Petition Consignment Agreements By
Returning or Paying for Consignment Goods Held on the
Petition Date" dated August 25, 1995, arising out of trans-
actions with such consignors comparable to the Borrower's
transactions with such consignors on prior to the Petition
Date;
(v) Liens in favor of the applicable consignor on
goods (other than Inventory) held by Borrower on consignment
for sale;
(vi) easements, rights-of-way, restrictions,
encroachments, covenants, conditions, licenses, zoning
requirements, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business
of Holdings or any of its Subsidiaries;
(vii) any interest or title of a lessor or lessee
under any lease permitted by this Agreement (including any
Lien granted by such lessor or lessee); and
(viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods.
"Person" means and includes natural persons, corpora-
tions, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, vehicle trusts, business
trusts, or other organizations, whether or not legal entities,
and agencies and governments and political subdivisions thereof.
"Petition Date" means August 2, 1995.
"Potential Event of Default" means a condition or event
that, after any notice or lapse of time or both expressly
provided under Section 8, would constitute an Event of Default if
that condition or event were not cured or removed within any
applicable grace or cure period.
"Prepetition Credit Agreement" means that certain
Credit Agreement dated as of June 11, 1992, as amended, by and
among WEI Holdings, Inc., Wherehouse Entertainment, Inc., the
lenders party thereto and Bankers, as agent for lenders.
"Prepetition Indebtedness" means Indebtedness of any
Loan Party outstanding on the Petition Date.
"Prime Rate" means the rate that Bankers announces from
time to time as its prime lending rate, as in effect from time to
time. The Prime Rate is a reference rate and does not necessari-
ly represent the lowest or best rate actually charged to any
customer. Bankers may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"Pro Rata Share" means the percentage designated as
such Lender's Pro Rata Share set forth opposite the name of such
Lender on Schedule 1.1B annexed hereto; provided that Schedule
1.1B shall be amended and Lenders' Pro Rata Shares shall be
adjusted from time to time to give effect to the addition of any
new Lenders pursuant to the proviso set forth in the definition
of "Lender". The sum of the Pro Rata Shares of all Lenders at
any date of determination shall equal 100%.
"Register" has the meaning assigned to that term in
subsection 2.2G.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to
time.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching, or migration in, by, from or related to any Facility
into the indoor or outdoor environment, including the movement of
any Hazardous Material through the air, soil, surface water,
groundwater or property.
"Requisite Lenders" means Lenders holding 51% of the
sum of the Commitments (or, if such Commitments have terminated
or expired, the Total Utilization of the Commitments).
"Restricted Junior Payment" means (i) any dividend or
other distribution, direct or indirect, on account of any shares
of any class of stock of Holdings or Borrower now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Holdings or
Borrower now or hereafter outstanding, (iii) any payment or
prepayment of principal of, premium, if any, or interest on,
redemption, purchase, conversion, repurchase, retirement, defeas-
ance, sinking fund or similar payment or deposit for payment with
respect to, the Subordinated Debt, and (iv) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock
of Holdings, Borrower or any of their Subsidiaries now or here-
after outstanding.
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or
other evidences of indebtedness (other than accounts receivable),
secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary
or interim certificates for the purchase or acquisition of, or
any right to subscribe to, purchase or acquire, any of the
foregoing.
"Senior Subordinated Debt" means the senior subordi-
nated notes of each series issued by Borrower pursuant to the
Senior Subordinated Indenture.
"Senior Subordinated Indenture" means that certain
Indenture dated as of June 1, 1992 by and between Borrower, as
issuer and United States Trust Company of New York, as the
trustee, and/or other agreements or documents pursuant to which
the Senior Subordinated Debt is issued.
"Standby Letter of Credit" means any standby letter of
credit or similar instrument issued for the purpose of supporting
the payment of any claim allowable as an administrative expense
in the Chapter 11 Cases, provided that, in accordance with
Section 2.5, Loan proceeds could also be used to pay such claim.
"Subordinated Debt" means the 1986 Subordinated Debt
and the Senior Subordinated Debt.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more
than 50% of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person
or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Total Utilization of Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal
amount of all outstanding Loans and (ii) the Letter of Credit
Usage.
"Transaction Costs" means the fees (other than the
Commitment Fee), costs and expenses payable by Holdings or
Borrower pursuant hereto.
1.2 Accounting Terms; Utilization of GAAP
For purposes of this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to
them in conformity with GAAP. Financial statements and other
information required to be delivered pursuant to subsection 5.1
shall be prepared in accordance with GAAP as in effect at the
time of such preparation; provided, however, that calculations in
connection with the definitions, covenants and other provisions
of this Agreement shall be made in accordance with GAAP as in
effect on the Closing Date.
1.3 References; Interpretation
Any reference in this Agreement (i) to a Section, a
Schedule or an Exhibit is a reference to a section hereof, a
schedule hereto or an exhibit hereto, respectively; and (ii) to a
subsection or a clause is, unless otherwise stated, a reference
to a subsection or a clause of the Section or subsection in which
the reference appears. In this Agreement the singular includes
the plural and the plural the singular; "hereof," "herein,"
"hereto," "hereunder" and the like means and refer to this Agree-
ment as a whole and not merely to the specific section, paragraph
or clause in which the respective word appears. Words importing
any gender include the other genders; references to statutes are
to be construed as including all statutory provisions ▇▇▇▇▇▇▇-
dating, amending or replacing such statute. References to
"writing" include printing, typing, lithography and other means
of reproducing words in a tangible visible form. The words
"including," "includes," and "include" shall be deemed to be
followed by the words "without limitation." References to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments, restatements, supplements,
assignments and other modifications thereto, but only to the
extent such amendments, restatements, supplements, assignments,
and other modifications are not prohibited by the terms of this
Agreement. References to Persons include their respective
permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such
Persons.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
AND LOANS
2.1 Loans
A. Commitments. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, each Lender hereby
severally agrees to lend to Borrower from time to time during the
period from the Closing Date to but excluding the Expiry Date its
Pro Rata Share of the aggregate Commitments (as defined below) to
be used for the purposes identified in subsection 2.5A. Each
Lender's commitment to make Loans to Borrower pursuant to this
subsection 2.1A is herein called its "Commitment" and such
commitments of all Lenders in the aggregate are herein called the
"Commitments". The original amount of each Lender's Commitment
is set forth on Schedule 1.1B annexed hereto and the aggregate
initial amount of the Commitments is $30,000,000. Each Lender's
Commitment shall expire on the Expiry Date and all Loans and all
other amounts owed hereunder with respect to the Loans shall be
paid in full no later than that date; provided that each Lender's
Commitment shall expire immediately and without further action on
October 31, 1995 if the Final Borrowing Order is not entered on
or before that date. The amount of the Commitments shall be
reduced by the amount of all reductions thereof made pursuant to
subsection 2.4F through the date of determination. In no event
shall the aggregate outstanding principal amount of the Loans
from any Lender at any time exceed its Commitment then in effect.
Subject to subsection 2.6D, all Loans under this Agree-
ment shall be made by Lenders simultaneously and proportionately
to their Pro Rata Shares, it being understood that no Lender
shall be responsible for any default by any other Lender in that
other Lender's obligation to make Loans hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of
the default by any other Lender in that other Lender's obligation
to make Loans hereunder.
Notwithstanding the foregoing provisions of this
subsection 2.1A and the provisions of subsection 2.1B, the
extensions of credit under the Commitments shall be subject to
the following limitations in the amounts and during the periods
indicated:
(i) The amount otherwise available for borrowing
under the Commitments as of any time of determination (other
than to reimburse Issuing Lender for the amount of any
drawings under any Letters of Credit honored by Issuing
Lender and not theretofore reimbursed by Borrower) shall be
reduced by Letter of Credit Usage as of such time of deter-
mination;
(ii) At no time shall the Total Utilization of
Commitments exceed the aggregate Commitments then in effect;
(iii) In no event shall any Lender's Pro Rata Share
of the Total Utilization of Commitments as of any date of
determination exceed its Commitment then in effect; and
(iv) At no time shall the Total Utilization of
Commitments exceed the then applicable Borrowing Base.
Loans borrowed by Borrower may be repaid and to, but
excluding, the Expiry Date, reborrowed. Loans made on any
Funding Date shall be in an aggregate amount of $1,000,000 and
integral multiples of $100,000 in excess of that amount; provided
that the amount of Eurodollar Rate Loans made on any Funding Date
shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.
B. Notice of Borrowing. Subject to subsection 2.1A,
whenever Borrower desires to borrow under this subsection 2.1, it
shall deliver to Agent a Notice of Borrowing no later than 12:30
P.M. (New York time) (i) one (1) Business Day in advance of the
proposed Funding Date, in the case of a requested Base Rate Loan
and (ii) three (3) Business Days in advance of the proposed
Funding Date in the case of a requested Eurodollar Rate Loan.
The Notice of Borrowing shall specify (a) the proposed Funding
Date (which shall be a Business Day), (b) the amount of the
proposed Loans, (c) whether such Loans are initially to consist
of Base Rate Loans or Eurodollar Rate Loans or a combination
thereof, (d) if such Loans, or any portion thereof, are initially
to be Eurodollar Rate Loans, the amounts thereof and the initial
Interest Periods therefor, (e) that after giving effect to the
proposed borrowing, the Total Utilization of Commitments will not
exceed the aggregate Commitments in effect on the proposed
Funding Date, and (f) after giving effect to the proposed
borrowing, the Total Utilization of Commitments will not exceed
the then applicable Borrowing Base.
Loans may be continued as or converted into Base Rate
Loans and Eurodollar Rate Loans in the manner provided in
subsection 2.2D. In lieu of delivering the above-described
Notice of Borrowing, Borrower may give Agent telephonic notice by
the required time of any proposed borrowing of Loans under this
subsection 2.1; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing to
Agent on or prior to the Funding Date of the requested Loans.
Neither Agent nor any Lender shall incur any liability
to Borrower in acting upon any telephonic notice referred to
above that Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on
behalf of Borrower or for otherwise acting in good faith under
this subsection 2.1B and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic
notice, Borrower shall have effected Loans hereunder.
Except as provided in subsection 2.6D, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and Borrower shall be bound to
make a borrowing in accordance therewith.
C. Disbursement of Funds. Promptly after receipt of
a Notice of Borrowing (or telephonic notice thereof), Agent shall
notify each Lender of the proposed borrowing. Each Lender shall
make the amount of its Loan available to Agent, in same day
funds, at the office of Agent located at One Bankers Trust Plaza,
New York, New York (or at any other location designated in
writing by Agent to Lenders) not later than 12:00 Noon (New York
time) on the Funding Date. Upon satisfaction or waiver of the
conditions precedent specified in subsections 3.1 (in the case of
the initial Loans) and 3.2 (in the case of all Loans), Agent
shall make the proceeds of such Loans available to Borrower on
such Funding Date by causing an amount of same day funds equal to
the proceeds of all such Loans received by Agent to be credited
to the account of Borrower at such office of Agent.
Unless Agent shall have been notified by any Lender
prior to any Funding Date in respect of any Loans that such
Lender does not intend to make available to Agent such Lender's
Loan on such Funding Date (which such notice, if so received by
Agent, shall promptly be communicated to Borrower), Agent may
assume that such Lender has made such amount available to Agent
on such Funding Date and Agent in its sole discretion may, but
shall not be obligated to, make available to Borrower a corres-
ponding amount on such Funding Date. If such corresponding
amount is not in fact made available to Agent by such Lender and
Agent makes such corresponding amount available to Borrower,
Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each
day from such Funding Date until the date such amount is paid to
Agent, at the customary rate set by Agent for the correction of
errors among banks for three (3) Business Days and thereafter at
the Prime Rate. If such Lender does not pay such corresponding
amount forthwith upon Agent's demand therefor, Agent shall
promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to Agent. Nothing in this subsection 2.1C
shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default
by such Lender hereunder.
2.2 Interest on the Loans
A. Rate of Interest. Subject to the provisions of
subsections 2.1B, 2.2E and 2.6H, each Loan shall bear interest on
the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at a rate deter-
mined by reference to the Base Rate or the Adjusted Eurodollar
Rate. The applicable basis for determining the rate of interest
shall be selected by Borrower initially at the time a Notice of
Borrowing is given pursuant to subsection 2.1B. The basis for
determining the interest rate with respect to any Loan may be
changed from time to time pursuant to subsection 2.2D. If on any
day a Loan is outstanding with respect to which notice has not
been delivered to Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of
interest, then for that day that Loan shall bear interest deter-
mined by reference to the Base Rate.
The Loans shall bear interest through maturity as
follows:
(i) if a Base Rate Loan, then at the sum of the
Base Rate plus 1.00% per annum; and
(ii) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 2.75% per annum.
B. Interest Periods. In connection with each
Eurodollar Rate Loan, Borrower shall elect an interest period
(each an "Interest Period") to be applicable to such Loan, which
Interest Period shall be either a one, two, three or six-month
period; provided that:
(i) the initial Interest Period for any Loan
shall commence on the Funding Date of such Loan;
(ii) in the case of immediately successive
Interest Periods, each successive Interest Period shall
commence on the day on which the next preceding Interest
Period expires;
(iii) if an Interest Period would otherwise expire
on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided
that if any Interest Period would otherwise expire on a day
that is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business
Day;
(iv) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
part (v) below, end on the last Business Day of a calendar
month;
(v) no Interest Period with respect to any Loan
shall extend beyond the Expiry Date;
(vi) the Interest Period for a Loan that is
converted pursuant to subsection 2.6D shall commence on the
date of such conversion and shall expire on the date on
which the Interest Period for the Loans of the other Lenders
that were not converted expires; and
(viii) there shall be no more than five Interest
Periods relating to Loans that are Eurodollar Rate Loans
outstanding at any time.
C. Interest Payments. Subject to subsection 2.2E,
interest shall be payable on the Loans as follows:
(i) interest on each Base Rate Loan shall be
payable in arrears on and to (but not including) the last
day of each calendar month, upon any prepayment of any such
Loan other than pursuant to subsection 2.4A(i) (to the
extent accrued on the amount being prepaid) and at maturity;
and
(ii) interest on each Eurodollar Rate Loan shall
be payable in arrears on and to (but not including) each
Interest Payment Date applicable to that Loan, upon any
prepayment of that Loan (to the extent accrued on the amount
being prepaid) and at maturity.
D. Conversion or Continuation. Subject to the
provisions of subsection 2.6, Borrower shall have the option to
(i) convert at any time all or any part of (a) outstanding Loans
which are Base Rate Loans equal to $1,000,000 and integral
multiples of $500,000 in excess of that amount and (b) outstand-
ing Eurodollar Rate Loans equal to $1,000,000 and integral
multiples of $100,000 in excess thereof, from Loans bearing
interest at a rate determined by reference to one basis to Loans
bearing interest at a rate determined by reference to an alter-
native basis, or (ii) upon the expiration of any Interest Period
applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $1,000,000 and integral multiples
of $500,000 in excess of that amount as a Eurodollar Rate Loan
and the succeeding Interest Period(s) of such continued Loan
shall commence on the last day of the Interest Period of the Loan
to be continued; provided, however, Eurodollar Rate Loans may
only be converted into Loans bearing interest determined by
reference to an alternative basis on the expiration date of an
Interest Period applicable thereto; and provided further that no
outstanding Loan may be continued as, or be converted into, a
Eurodollar Rate Loan when any Event of Default or Potential Event
of Default has occurred and is continuing.
Borrower shall deliver a Notice of Conversion/Continu-
ation to Agent no later than 12:30 P.M. (New York time) at least
three (3) Business Days in advance of the proposed conversion/
continuation date (in the case of a conversion to a Base Rate
Loan), and at least three (3) Business Days in advance of the
proposed conversion/continuation date (in the case of a conver-
sion to, or a continuation of, a Eurodollar Rate Loan). A Notice
of Conversion/Continuation shall certify (i) the proposed conver-
sion/continuation date (which shall be a Business Day), (ii) the
amount of the Loan to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the
requested Interest Period, and (v) that no Potential Event of
Default or Event of Default has occurred and is continuing or
would result from the proposed conversion/continuation. In lieu
of delivering the above-described Notice of Conversion/Continua-
tion, Borrower may give Agent telephonic notice by the required
time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/
Continuation to Agent on or before the proposed conversion/
continuation date.
Neither Agent nor any Lender shall incur any liability
to Borrower in acting upon any telephonic notice referred to
above that Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to act on
behalf of Borrower or for otherwise acting in good faith under
this subsection 2.2D and upon conversion/continuation by Agent in
accordance with this Agreement, pursuant to any telephonic notice
Borrower shall have effected such conversion or continuation as
the case may be, hereunder.
Except as provided in subsection 2.6D, a Notice of
Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall
be irrevocable on and after the related Interest Rate Determina-
tion Date, and Borrower shall be bound to convert or continue in
accordance therewith.
E. Default Rate; Post Maturity Interest. Upon the
occurrence and during the continuance of an Event of Default, the
interest rate payable by Borrower with respect to principal of
Loans and, to the extent permitted by law, interest payments
thereon not paid when due, shall be increased, effective from and
after the date of occurrence of such Event of Default and for as
long as such Event of Default continues, to a rate that is two
percent (2%) per annum in excess of the rate otherwise payable
under this Agreement (or, in the case of interest payable on fees
and other amounts due hereunder, at the Base Rate plus 3.00%);
provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such
increase in interest rate is effective, such Eurodollar Rate
Loans shall thereupon become Base Rate Loans and thereafter bear
interest payable upon demand at a rate which is two percent (2%)
per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. The rate provided in this
subsection 2.2E shall be reduced by two percent (2%) per annum to
the rate otherwise payable under this Agreement effective upon
the cure pursuant to the terms of this Agreement of all Events of
Default giving rise to the increase provided herein. No waiver
of any Event of Default and no amendment to this Agreement shall
operate as a cure of any Event of Default unless expressly stated
in writing in such waiver or amendment. The payment or accept-
ance of the increased rate provided by this subsection 2.2E shall
not constitute a waiver of any Event of Default or an amendment
to this Agreement or otherwise prejudice or limit any rights or
remedies of Agent or any Lender.
F. Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of the making of such
Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a
Eurodollar Rate Loan, the date of conversion of such Eurodollar
Rate Loan to such Base Rate Loan, shall be included; and the date
of payment of such Loan or the expiration date of an Interest
Period applicable to such Loan, or with respect to a Base Rate
Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate Loan,
shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that
Loan.
G. Register.
(i) Agent shall maintain a register (the
"Register") on which it will record the Commitments from time to
time of each of the Lenders (including the Commitments), the
Loans made by each of the Lenders (including the Loans) and each
repayment in respect of the principal amount of the Loans of each
Lender. Any such recordation shall be conclusive and binding,
absent manifest error.
(ii) Each Lender will record on its internal
records the amount of each Loan made by it and each payment in
respect thereof. Failure to make any such recordation, or any
error in such recordation, shall not affect the Obligations of
Borrower in respect of such Loans. Any such recordation shall be
conclusive and binding, absent manifest error; provided, that in
the event of any discrepancy between the Register and a Lender's
internal records, the Register shall be conclusive and binding
absent manifest error.
H. Note Option. Any Lender or Agent may, by notice
to Agent and Borrower, request that all or part of the principal
amount of the Borrower's Obligations to such Lender or Agent in
respect of Commitments hereunder be evidenced by a Note. Within
three (3) Business Days of Borrower's receipt of such notice,
Borrower shall execute and deliver to Agent for delivery to the
appropriate Lender or Agent a Note or Notes in the principal
amount(s) specified in such notice, payable to the notifying
Lender or Agent or, if so specified in such notice, any Person
who is an assignee of such Lender or Agent pursuant to subsection
10.2 hereof.
2.3 Fees
A. Borrower agrees to pay to Agent, for distribution
to each Lender in proportion to that Lender's Pro Rata Share of
the Commitments, commitment fees for the period from and
including the Closing Date to but excluding the Expiry Date equal
to the average of the daily unused portion of the Commitments
multiplied by 1/2 of 1% per annum, such commitment fees to be
calculated on the basis of a 360-day year and the actual number
of days elapsed and to be payable in arrears on and to (but not
including) the last day of each Fiscal Quarter, commencing on the
first such date to occur after the Closing Date, and upon the
termination of the Commitments. Anything contained in this
Agreement to the contrary notwithstanding, for purposes of
calculating the commitment fees payable by Borrower pursuant to
this subsection 2.3A, the "unused portion of the Commitments", as
of any date of determination, shall be an amount equal to the
aggregate amount of Commitments as of such date minus the
aggregate principal amount of all outstanding Loans and the
Letter of Credit Usage on such date; provided that the unused
portion of the Commitments shall not be reduced by reason of any
limitation of the amount available for borrowing thereunder set
forth in subsection 2.1A(iv).
B. Borrower agrees to pay to Bankers Trust Company,
for its own account, the fees set forth in that certain letter
agreement dated as of September 25, 1995 by and between Borrower
and Bankers Trust Company.
2.4 Prepayments and Payments; Reductions in
Commitments
A. Prepayments.
(i) Voluntary Prepayments of Loans. Borrower
may, upon not less than three (3) Business Days' prior
written or telephonic notice confirmed in writing to Agent
(which notice Agent will promptly transmit by telegram,
telex or telephone to each Lender, any such telephonic
notice to be promptly confirmed by Agent in writing) speci-
fying the Loan or Loans to which such prepayment is to be
applied, at any time and from time to time prepay Loans in
whole or in part in an aggregate minimum amount of $500,000
and integral multiples of $100,000 in excess of that amount
or, if such amount is less than $500,000, in the then
remaining amount of the Loans; provided that Eurodollar Rate
Loans may only be prepaid on a day that is not the last day
of an Interest Period if, prior to or concurrently with such
prepayment, Borrower pays all amounts due pursuant to
subsection 2.6E. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in
such notice shall become due and payable on the prepayment
date.
(ii) Mandatory Prepayments. Borrower shall make
prepayments of Loans necessary to give effect to the limita-
tions set forth in subsection 2.1A.
(iii) Application of Prepayments. All prepayments
shall include payment of accrued interest on the principal
amount so prepaid and shall be applied to the payment of
interest before application to principal. If the notice of
prepayment does not specify how such prepayment shall be
applied, it shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate
Loans, as determined by Agent.
B. Manner and Time of Payment. All payments of
principal, interest and fees hereunder and under the Notes by
Borrower shall be made without defense, set-off or counterclaim
and in same day funds and delivered to Agent for the account of
Lenders not later than 12:30 P.M. (New York time) on the date due
at its office located at One Bankers Trust Plaza, New York, New
York; funds received by Agent after that time shall be deemed to
have been paid by Borrower on the next succeeding Business Day.
Borrower hereby authorizes Agent to charge its account with Agent
in order to cause timely payment to be made to Agent of all
principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
C. Apportionment of Payments. Aggregate principal
and interest payments shall be apportioned among all outstanding
Loans to which such payments relate, and such payments shall be
apportioned ratably to Lenders, proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly distribute to
each Lender at its primary address set forth below its name on
the appropriate signature page hereof or such other address as
any Lender may request its share of all such payments received by
Agent and the commitment fees of such Lender when received by
Agent pursuant to subsection 2.3A. Notwithstanding the foregoing
provisions of this subsection 2.4C if, pursuant to the provisions
of subsection 2.6D, any Notice of Borrowing or Notice of Conver-
sion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Pro Rata
Share of Eurodollar Rate Loans, Agent shall give effect thereto
in apportioning payments received thereafter.
D. Payments on Non-Business Days. Whenever any
payment to be made hereunder or under the Notes shall be stated
to be due on a day that is not a Business Day, the payment shall
be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of
interest hereunder or under the Notes or of the commitment and
other fees hereunder, as the case may be; provided, however, that
if the day on which payment relating to a Eurodollar Rate Loan is
due is not a Business Day but is a day of the month after which
no further Business Day occurs in that month, then the due date
thereof shall be the next preceding Business Day.
E. Notation of Payment. Each Lender agrees that
before disposing of any Note held by it, or any part thereof
(other than by granting participations therein), that Lender will
make a notation thereon of all Loans and principal payments
previously made thereon and of the date to which interest thereon
has been paid and will notify Borrower and Agent of the name and
address of the transferee of that Note; provided that the failure
to make (or any error in the making of) a notation of any Loan
made under such Notes or to notify Borrower and Agent of the name
and address of such transferee shall not limit or otherwise
affect the obligation of any Loan Party hereunder or under such
Notes with respect to any Loan and payments of principal or
interest on any such Note.
F. Voluntary Reductions of Commitments. Borrower
shall have the right at any time and from time to time, without
premium or penalty, (i) to terminate the Commitments in whole or
(ii) to permanently reduce in part the Commitments in an amount
up to the amount by which the Commitments exceed the Total
Utilization of Commitments on the effective date of such
reduction. Borrower shall give not less than one (1) Business
Day's prior written notice to Agent designating the date (which
shall be a Business Day) of such termination or reduction and the
amount of any partial reduction. Promptly after receipt of a
notice of such termination or partial reduction, Agent shall
notify each Lender of the proposed termination or reduction.
Such termination or partial reduction of the Commitments, as the
case may be, shall be effective on the date specified in
Borrower's notice and shall reduce the relevant Commitment of
each Lender proportionately to its Pro Rata Share. Any such
partial reduction of the Commitments shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000
in excess of that amount unless the remaining amount of such
Commitments is less than $1,000,000 in which case such reduction
shall be in the amount of the then remaining Commitments.
2.5 Use of Proceeds
A. The proceeds of Loans may be applied by Borrower
for any lawful purpose, which may include the reimbursement of
Issuing Lender of any amounts drawn under any Letter of Credit as
provided in subsection 2.8C; provided that in no event shall any
Loan proceeds be used for any adversary proceeding or other
litigation related to the Prepetition Credit Agreement or the
lenders party thereto.
B. Letters of Credit. The Letters of Credit shall be
issued for the purposes set forth in the definition of Commercial
Letter of Credit and Standby Letter of Credit and such other
general corporate purposes as may, in any instance, be approved
by Agent and Requisite Lenders.
C. Margin Regulations. No portion of the proceeds of
any borrowing under this Agreement shall be used by Borrower to
purchase or carry any Margin Stock in any manner that might cause
the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T, or Regulation X of the
Board of Governors of the Federal Reserve System or any other
regulation of the Board or to violate the Exchange Act, in each
case as in effect on the date or dates of such borrowing and such
use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement,
the following provisions shall govern with respect to Eurodollar
Rate Loans as to the matters covered:
A. Determination of Interest Rate. As soon as
practicable after 10:00 A.M. (New York time) on each Interest
Rate Determination Date, Agent shall determine (which determina-
tion shall, absent manifest error, be final, conclusive and
binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower and each Lender.
B. Substituted Rate of Borrowing. If on any Interest
Rate Determination Date any Lender (including Agent) shall have
determined (which determination shall be final and conclusive and
binding upon all parties but, with respect to the following
clauses (i) and (ii)(b), shall be made only after consultation
with Borrower and Agent) that:
(i) by reason of any changes arising after the
date of this Agreement affecting the Eurodollar market or
affecting the position of that Lender in such market,
adequate and fair means do not exist for ascertaining the
applicable interest rate by reference to the Eurodollar Rate
with respect to the Eurodollar Rate Loans as to which an
interest rate determination is then being made; or
(ii) by reason of (a) any change after the date
hereof in any applicable law or governmental rule, regula-
tion or order (or any interpretation thereof and including
the introduction of any new law or governmental rule,
regulation or order) or (b) other circumstances affecting
that Lender or the Eurodollar market or the position of that
Lender in such market (such as for example, but not limited
to, official reserve requirements required by Regulation D
to the extent not given effect in the Adjusted Eurodollar
Rate), the Adjusted Eurodollar Rate shall not represent the
effective pricing to that Lender for Dollar deposits of
comparable amounts for the relevant period;
then, and in any such event, that Lender shall be an Affected
Lender and it shall promptly (and in any event as soon as
possible after being notified of a borrowing, conversion or
continuation) give notice (by telephone confirmed in writing) to
Borrower and Agent (which notice Agent shall promptly transmit to
each other Lender) of such determination. Thereafter, Borrower
shall pay to the Affected Lender, upon written demand therefor,
such additional amounts (in the form of an increased rate of, or
a different method of calculating, interest or otherwise as the
Affected Lender in its sole discretion shall determine) as shall
be required to cause the Affected Lender to receive interest with
respect to its Eurodollar Rate Loans for the Interest Period
following that Interest Rate Determination Date at a rate per
annum equal to 2.75% per annum in excess of the effective pricing
to the Affected Lender for Dollar deposits to make or maintain
its Eurodollar Rate Loans. A certificate as to additional
amounts owed the Affected Lender, showing in reasonable detail
the basis for the calculation thereof, submitted in good faith to
Borrower and Agent by the Affected Lender shall, absent manifest
error, be final and conclusive and binding upon all of the
parties hereto.
C. Required Termination and Prepayment. If on any
date any Lender shall have reasonably determined (which deter-
mination shall be final and conclusive and binding upon all
parties) that the making or continuation of its Eurodollar Rate
Loans has become unlawful or impossible by compliance by that
Lender in good faith with any law, governmental rule, regulation
or order (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful), then, and in
any such event, that Lender shall be an Affected Lender and it
shall promptly give notice (by telephone confirmed in writing) to
Borrower and Agent (which notice Agent shall promptly transmit to
each Lender) of that determination. Subject to the prior with-
drawal of a Notice of Borrowing or a Notice of Conversion/
Continuation or prepayment of the Eurodollar Rate Loans of the
Affected Lender as contemplated by the following subsection 2.6D,
the obligation of the Affected Lender to make or maintain its
Eurodollar Rate Loans during any such period shall be suspended
at the earlier of the termination of the Interest Period then in
effect or when required by law and Borrower shall no later than
the termination of the Interest Period in effect at the time any
such determination pursuant to this subsection 2.6C is made or,
earlier, when required by law, repay or prepay the Eurodollar
Rate Loans of the Affected Lender, together with all interest
accrued thereon.
D. Options of Borrower. In lieu of paying an
Affected Lender such additional moneys as are required by
subsection 2.6B or the prepayment of an Affected Lender required
by subsection 2.6C, Borrower may exercise any one of the
following options:
(i) If the determination by an Affected Lender
relates only to Eurodollar Rate Loans then being requested
by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower may by giving notice (by
telephone confirmed in writing) to Agent (who shall promptly
give similar notice to each Lender) no later than the date
immediately prior to the date on which such Eurodollar Rate
Loans are to be made, withdraw that Notice of Borrowing or
Notice of Conversion/Continuation and the Eurodollar Rate
Loans then being requested shall be made by Lenders as Base
Rate Loans; or
(ii) Upon written notice to Agent and each Lender,
Borrower may terminate the obligations of Lenders to make or
maintain Loans as, and to convert Loans into, Eurodollar
Rate Loans and in such event, Borrower shall, prior to the
time any payment pursuant to subsection 2.6C is required to
be made or, if the provisions of subsection 2.6B are
applicable, at the end of the then current Interest Period,
convert all of the Eurodollar Rate Loans into Base Rate
Loans in the manner contemplated by subsection 2.2D but
without satisfying the advance notice requirements therein;
or
(iii) Borrower may give notice (by telephone
confirmed in writing) to the Affected Lender and Agent (who
shall promptly give similar notice to each Lender) and
require the Affected Lender to make the Eurodollar Rate Loan
then being requested as a Base Rate Loan or to continue to
maintain its outstanding Base Rate Loan then the subject of
a Notice of Conversion/Continuation as a Base Rate Loan or
to convert its Eurodollar Rate Loans then outstanding that
are so affected into Base Rate Loans at the end of the then
current Interest Period (or at such earlier time as prepay-
ment is otherwise required to be made pursuant to subsection
2.6C) in the manner contemplated by subsection 2.2D but
without satisfying the advance notice requirements therein,
that notice to pertain only to the Loans of the Affected
Lender and to have no effect on the obligations of the other
Lenders to make or maintain Eurodollar Rate Loans or to
convert Base Rate Loans into Eurodollar Rate Loans.
E. Compensation. Borrower shall compensate each
Lender, upon written request by that Lender (which request shall
set forth in reasonable detail the basis for requesting such
amounts and which shall, absent manifest error, be conclusive and
binding upon all parties hereto), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss
(including interest paid) sustained by that Lender in connection
with the re-employment of such funds), that Lender may sustain:
(i) if for any reason (other than a default by that Lender) a
borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing, a Notice of Conver-
sion/Continuation or a telephonic request for borrowing or
conversion/continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to subsection
2.2D, (ii) if any prepayment of any of its Eurodollar Rate Loans
occurs on a date that is not the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Borrower, or (iv) as a consequence
of any other default by Borrower to repay its Eurodollar Rate
Loans when required by the terms of this Agreement.
F. Quotation of Eurodollar Rate. Anything herein to
the contrary notwithstanding, if on any Interest Rate Determina-
tion Date Bankers is as a matter of general practice not quoting
rates to first class banks in the Eurodollar market for the
offering of Dollars for deposit with maturities comparable to
the Interest Period and in amounts comparable to the Eurodollar
Rate Loans requested, Agent shall give Borrower and each Lender
prompt notice thereof and the Loans requested shall be made as
Base Rate Loans.
G. Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of, any of its branch offices or the office of an
Affiliate of that Lender.
H. Increased Costs. Except as provided in subsection
2.6B with respect to certain determinations on Interest Rate
Determination Dates, if, after the date hereof by reason of, (x)
the introduction of or any change (including, without limitation,
any change by way of imposition or increase of reserve require-
ments) in or in the interpretation of any treaty, law, rule, or
regulation after the date hereof, or (y) the compliance with any
guideline or request from any central bank or other governmental
authority or quasigovernmental authority exercising control over
banks or financial institutions generally (whether or not having
the force of law) issued or made applicable after the date
hereof:
(i) any Lender (or its applicable lending office)
shall be subject to any tax, duty, levy, cost or other
charge (except for taxes on the overall net income or alter-
native minimum taxable income of such Lender or its applica-
ble lending office imposed by the jurisdiction in which such
Lender's principal executive office or applicable lending
office is organized, located or is doing business) with
respect to its Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Loans, or the recording, registration,
notarization or other formalization of the Eurodollar Rate
Loans or the basis of taxation of payments to any Lender of
the principal of or interest or commitment fees or any
amount payable on its Eurodollar Rate Loans or its obliga-
tion to make Eurodollar Rate Loans shall change; or
(ii) any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal Reserve
System but excluding the reserve reflected in the Adjusted
Eurodollar Rate), special deposit or similar requirement
against assets of, deposits with or for the account of, or
credit extended by, any Lender's applicable lending office
shall be imposed or deemed applicable or any other condition
affecting its Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Loans shall be imposed on any Lender or
its applicable lending office or the interbank Eurodollar
market,
and as a result thereof there shall be any increase in the cost
to such Lender of agreeing to make or making, funding or main-
taining Eurodollar Rate Loans, or there shall be a reduction in
the amount received or receivable by that Lender or its
applicable lending office, then Borrower shall from time to time,
upon written notice from and demand by that Lender (with a copy
of such notice and demand to Agent), pay to Agent for the account
of that Lender, within five (5) Business Days after receipt of
such notice, demand and appropriate proof of such cost, addi-
tional amounts sufficient to indemnify that Lender against such
increased cost or reduced amount. A certificate as to the amount
of such increased cost or reduced amount, submitted to Borrower
and Agent by that Lender, shall, except for manifest error, be
final, conclusive and binding for all purposes. Any payments to
be made by Borrower under subsections 2.6B or 2.6H are to be
without duplication.
No payment shall be required under this subsection 2.6H
for any cost incurred by a Lender more than 180 days prior to the
date demand for payment on account of such cost is given by such
Lender under this subsection 2.6H.
I. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under this
subsection 2.6 shall be made as though that Lender had actually
funded its relevant Eurodollar Rate Loan through the purchase of
a Eurodollar deposit bearing interest at the Eurodollar Rate in
an amount equal to the amount of that Eurodollar Rate Loan and
having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the
United States of America; provided, however, that each Lender may
fund each of its Eurodollar Rate Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection 2.6.
J. Eurodollar Rate Loans After Default. Unless Agent
and Requisite Lenders shall otherwise agree, after the occurrence
of and during the continuance of a Potential Event of Default or
Event of Default, Borrower may not elect to have a Loan be made
or maintained as, or converted to, a Eurodollar Rate Loan after
the expiration of any Interest Period then in effect for that
Loan.
K. Affected Lenders' Obligation to Mitigate. Each
Lender agrees that, as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a
condition that would cause it to be an Affected Lender under
subsection 2.6B or 2.6C or that would entitle such Lender to
receive payments under subsection 2.6H, it will, to the extent
not inconsistent with such Lender's internal policies, use
reasonable efforts to make, fund or maintain the affected
Eurodollar Rate Loans of such Lender through another lending
office of such Lender if as a result thereof the additional
moneys which would otherwise be required to be paid to such
Lender pursuant to subsection 2.6B or 2.6H would be materially
reduced or the illegality or other adverse circumstances which
would otherwise require prepayment of such Loans pursuant to
subsection 2.6C would cease to exist, and if, as determined by
such Lender in its sole discretion, the making, funding or
maintaining of such Loans through such other lending office would
not otherwise materially adversely affect such Loans or such
Lender. Borrower hereby agrees to pay all reasonable expenses
incurred by any Lender in utilizing another lending office of
such Lender pursuant to this subsection 2.6K.
2.7 Capital Adequacy Adjustment
In the event that any Lender shall have determined that
the adoption or implementation after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, or any change
therein or in the interpretation or application thereof, or
compliance by any Lender with any request or directive received
or otherwise made applicable to it after the date hereof
regarding capital adequacy (whether or not having the force of
law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body
having jurisdiction, does or shall have the effect of increasing
the amount of capital required to be maintained by such Lender
and thereby reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder, then Borrower
shall from time to time, within five (5) days of written notice
and demand from such Lender (with a copy to Agent) including a
certificate setting forth in reasonable detail the manner of
calculation of the reduction in the rate of return on such
Lender's capital and claiming compensation pursuant to this
subsection 2.7, pay to Agent, for the account of such Lender,
additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of such compensation,
submitted to Borrower and Agent by such Lender, shall, absent
manifest error, be final, conclusive and binding for all
purposes. In determining such amount, a Lender may use any
reasonable averaging and attribution method. Notwithstanding the
foregoing, nothing in this subsection 2.7 is intended to provide
and this subsection 2.7 shall not provide to any Loan Party the
right to inspect the records, files or books of any Lender.
No payment shall be required under this Section 2.7 in
respect of any compensation claimed by a Lender if such Lender if
the event or condition that is the basis of such claim occurs
more than 180 days prior to the date demand for payment on
account of such event or condition is given by such Lender under
this Section 2.7.
2.8 Letters of Credit
A. Letters of Credit. In addition to Borrower
requesting that Lenders make Loans pursuant to subsection 2.1,
Borrower may request, in accordance with the provisions of this
subsection, on and after the date on which all of the conditions
set forth in subsection 3.1 are satisfied to and excluding the
Expiry Date, that Agent or one or more Lenders issue Letters of
Credit for the account of Borrower; provided that, if no Lender
is willing to provide any Letter of Credit, Agent shall, if each
of the conditions to issuance of such Letter of Credit in this
Agreement is met, issue such Letter of Credit; provided further,
that
(i) Borrower shall not request that Agent or any
Lender issue (and neither Agent nor any Lender shall issue)
any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Commitments would exceed
the aggregate of all Commitments;
(ii) Borrower shall not request that Agent or any
Lender issue any Letter of Credit if, after giving effect to
such issuance, the Letter of Credit Usage would exceed
$10,000,000;
(iii) Borrower shall not request that Agent or any
Lender issue (and neither Agent nor any Lender shall issue)
any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Commitments would exceed
the then applicable Borrowing Base;
(iv) in no event shall Agent or any Lender issue
any Commercial Letter of Credit having an expiration date
which is (a) not acceptable to such Issuing Lender in its
reasonable discretion, (b) more than one hundred eighty
(180) days after its date of issuance or (c) later than 30
days prior to the Expiry Date of this Agreement;
(v) in no event shall Agent or any Lender issue
any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Expiry Date of this Agreement,
and (b) the date which is one year from the date of issuance
of such Standby Letter of Credit; provided that this clause
(b) shall not prevent any Issuing Lender from agreeing
(subject to clause (a) of this subsection 2.8A(v)) that a
Standby Letter of Credit will automatically be extended
annually for a period not to exceed one year unless such
Issuing Lender elects not to extend for such additional
period; and
(vi) in no event shall Borrower request any Letter
of Credit denominated in a currency other than Dollars.
The issuance or extension of any Letter of Credit in
accordance with the provisions of this subsection shall require
the satisfaction of each condition set forth in subsection 3.3;
provided, however, the obligation of each Issuing Lender to issue
or extend any Letter of Credit is subject to the condition that
(y) such Issuing Lender believed in good faith that all condi-
tions under subsections 2.8A and 3.3 to the issuance or extension
of such Letter of Credit were satisfied at the time such Letter
of Credit was issued or extended or (z) the satisfaction of any
such condition not satisfied had been waived by Requisite Lenders
prior to or at the time such Letter of Credit was issued or
extended; provided further that Issuing Lender shall be entitled
to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper
person or persons, including, without limitation, an Officers'
Certificate from Borrower as to the satisfaction of the condi-
tions under subsection 3.3, in determining the satisfaction of
any conditions to the issuance or extension of any Letter of
Credit or the Total Utilization of Commitments or Letter of
Credit Usage then in effect.
Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Issuing Lender a participation in
such Letter of Credit and drawings thereunder in an amount equal
to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
Each Letter of Credit supporting the payment of Indebt-
edness may (but shall not be required to) provide that the
Issuing Lender may pay the beneficiary thereof upon the occur-
rence of an Event of Default and the acceleration of the maturity
of the Loans or, if payment is not then due to the beneficiary,
provide for the deposit of funds in an account to secure payment
to the beneficiary and that any funds so deposited shall be paid
to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Lender for
distribution to Lenders (or, if all Obligations shall have been
indefeasibly paid in full, to Borrower) if no payment to the
beneficiary has been made and the final date available for
drawings under the Letter of Credit has passed. Each payment or
deposit of funds by the Issuing Lender as provided in this
paragraph shall be treated for all purposes of this Agreement as
a drawing duly honored by the Issuing Lender under the related
Letter of Credit.
Each Issuing Lender (other than Agent) shall send to
Agent by telecopy, promptly on the first Business Day of each
week, their daily outstanding Commercial Letter of Credit
balances for the immediately prior week. Upon the last day of
each Fiscal Month, Agent shall deliver to each Lender a report
setting forth for such Fiscal Month the aggregate daily amount
available to be drawn under all outstanding Letters of Credit.
B. Request for Issuance. Whenever Borrower desires
to cause Agent or any Lender to issue a Letter of Credit, it
shall deliver to Agent and that Lender a Notice of Issuance of
Letter of Credit substantially in the form of Exhibit II annexed
hereto or via another format acceptable to Agent and the Issuing
Lender no later than 1:00 P.M. (New York time) at least ten (10)
Business Days in advance of the proposed date of issuance or such
shorter time as may be acceptable to the Issuing Lender. The
Notice of Issuance of Letter of Credit shall specify (i) the
proposed Issuing Lender, (ii) the proposed date of issuance
(which shall be a Business Day), (iii) the face amount of the
Letter of Credit, (iv) the expiration date of the Letter of
Credit, (v) the name and address of the beneficiary, (vi) such
other documents or materials as such Issuing Lender may reasona-
▇▇▇ request, and (vii) a precise description of the documents and
the verbatim text of any certificate to be presented by the
beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the
Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its sole judgment, may
require changes in any such documents and certificates; provided
further that the Issuing Lender shall not be required to issue
any Letter of Credit that on its terms requires payment there-
under prior to the third Business Day following receipt by the
Issuing Lender of such documents and certificates. In deter-
mining whether to pay any Letter of Credit, the Issuing Lender
shall be responsible only to use reasonable care to determine
that the documents and certificates required to be delivered
under that Letter of Credit have been delivered and that they
substantially comply on their face with the requirements of that
Letter of Credit. Promptly upon the issuance of a Letter of
Credit, the Issuing Lender shall notify Agent and each Lender of
the issuance and the amount of each such Lender's respective
participation therein determined in accordance with subsection
2.8D.
C. Payment of Amounts Drawn Under Letters of Credit.
In the event of any request for payment under any Letter of
Credit by the beneficiary thereof, the Issuing Lender shall
immediately notify Borrower and Agent and Borrower shall
reimburse the Issuing Lender on the day on which such payment is
honored in an amount in same day funds equal to the amount of
such payment; provided that, anything contained in this Agreement
to the contrary notwithstanding and with respect to all Letters
of Credit, (i) unless prior to 12:30 P.M. (New York time) on the
date of such payment (a) Borrower shall have notified the Issuing
Lender and Agent that Borrower intends to reimburse the Issuing
Lender for the amount of such payment with funds other than the
proceeds of Loans or (b) Borrower shall have delivered a Notice
of Borrowing requesting Loans which are Eurodollar Rate Loans in
an amount equal to the amount of such payment, Borrower shall be
deemed to have given a Notice of Borrowing to Agent requesting
Lenders to make Loans which are Base Rate Loans on the date on
which such payment is honored in an amount equal to the amount of
such payment, and, whether or not the conditions in Section 3.3
are then satisfied, Lenders shall, on the date of such payment,
make Loans which are Base Rate Loans in the amount of such
payment, the proceeds of which shall be applied directly by Agent
to reimburse the Issuing Lender for the amount of such payment;
and provided further that if for any reason proceeds of Loans are
not received by the Issuing Lender on such date in an amount
equal to the amount of such payment, Borrower shall (without
prejudice to any claim Borrower may have against any defaulting
Lender) reimburse the Issuing Lender, on the Business Day
immediately following the date of such payment, in an amount in
same day funds equal to the excess of the amount of such payment
over the amount of such Loans, if any, which are so received,
plus accrued interest on such amount at the rate set forth in
subsection 2.8E(iii).
D. Payment by Lenders. If Borrower shall fail to
reimburse the Issuing Lender, for any reason, as provided in
subsection 2.8C (including, without limitation, the making of
Loans by Lenders pursuant to the terms of subsection 2.8C) in an
amount equal to the amount of any drawing honored by the Issuing
Lender under a Letter of Credit issued by it, the Issuing Lender
shall promptly notify each Lender of the unreimbursed amount of
such drawing and of such Lender's respective participation
therein based on such Lender's Pro Rata Share. Each Lender shall
make available to the Issuing Lender an amount equal to its
respective participation, in same day funds, at the office of the
Issuing Lender specified in such notice, not later than 1:00 P.M.
(New York time) on the Business Day after the date notified by
the Issuing Lender. If any Lender fails to make available to the
Issuing Lender the amount of such Lender's participation in such
Letter of Credit as provided in this subsection 2.8D, the Issuing
Lender shall be entitled to recover such amount on demand from
such Lender together with interest at the customary rate set by
the Issuing Lender for the correction of errors among banks for
one (1) Business Day and thereafter at the Prime Rate. Nothing
in this subsection shall be deemed to prejudice the right of any
Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this
subsection if it is determined in a final judgment by a court of
competent jurisdiction that the payment with respect to a Letter
of Credit by the Issuing Lender in respect of which payment was
made by such Lender constituted gross negligence or willful
misconduct on the part of the Issuing Lender. The Issuing Lender
shall distribute to each other Lender which has paid all amounts
payable by it under this subsection with respect to any Letter of
Credit issued by the Issuing Lender such other Lender's Pro Rata
Share of all payments received by the Issuing Lender from Borrow-
er in reimbursement of drawings honored by the Issuing Lender
under such Letter of Credit when such payments are received.
E. Compensation. Borrower agrees to pay the follow-
ing amounts to the Issuing Lender with respect to each Letter of
Credit issued by it:
(i) with respect to each Letter of Credit, an
administrative fee equal to $200 for each issuance, amend-
ment and drawing under such Letter of Credit;
(ii) with respect to each Letter of Credit, a
commission equal to 1.75% per annum, multiplied by the
maximum amount available from time to time to be drawn under
such Letter of Credit, payable in arrears on the last day of
each Fiscal Month; and
(iii) with respect to drawings made under any
Letter of Credit, interest, payable on demand, on the amount
paid by the Issuing Lender in respect of each such drawing
from the date the drawing is honored by the Issuing Lender
through the date such amount is reimbursed by Borrower
(including any such reimbursement out of the proceeds of
Loans pursuant to subsection 2.8C) at a rate which is equal
to 1.00% per annum in excess of the Base Rate; provided that
if such amount is not paid on demand, the Obligations shall
bear interest thereafter in accordance with the provisions
of subsection 2.2E;
Promptly upon receipt by Issuing Lender of any amount
described in clauses (ii) or (iii) of this subsection 2.8E with
respect to a Letter of Credit, the Issuing Lender shall distri-
bute to each Lender its Pro Rata Share of such amount; provided
that Lenders may, upon the written agreement of Lenders, allocate
a portion of the amounts payable pursuant to clause (ii) to
Issuing Lender, for its own account, as compensation for issuing
the applicable Letters of Credit.
F. Obligations Absolute. The obligation of Borrower
to reimburse the Issuing Lender for payments made under the
Letters of Credit issued by it and to repay any Loans made by
Lenders pursuant to subsection 2.8C and the obligations by
Lenders under subsection 2.8D shall be unconditional and
irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense
or other right which Borrower may have at any time against a
beneficiary or any transferee of any Letter of Credit (or
any persons or entities for whom any such transferee may be
acting), Agent, any Lender or any other Person, whether in
connection with this Agreement, the transactions contem-
plated herein or any unrelated transaction (including any
underlying transaction between Borrower and the beneficiary
for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the Issuing Lender under any
Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the
terms of such Letter of Credit; provided that such payment
does not constitute gross negligence or willful misconduct
of such Issuing Lender;
(v) any adverse change in the condition (▇▇▇▇▇-
cial or otherwise) of Holdings or any of its Subsidiaries;
(vi) any breach of this Agreement or any other
Loan Document by Holdings or any of its Subsidiaries, Agent,
or any Lender (other than the Issuing Lender);
(vii) any other circumstance or happening whatso-
ever, which is similar to any of the foregoing; provided
that such circumstance or happening does not directly result
from the gross negligence or willful misconduct of such
Issuing Lender; or
(viii) the fact that an Event of Default or a Poten-
tial Event of Default shall have occurred and be continuing.
G. Additional Payments. If by reason of (i) any
change after the date hereof in any applicable law, regulation,
rule, decree or regulatory requirement or any change in the
interpretation or application by any judicial or regulatory
authority of any law, regulation, rule, decree or regulatory
requirement applicable to financial institutions generally or
(ii) compliance by the Issuing Lender or any Lender with any
direction, request or requirement after the date hereof (whether
or not having the force of law) of any governmental or monetary
authority including, without limitation, Regulation D:
(a) the Issuing Lender or any Lender shall be subject
to any tax, levy, charge or withholding of any nature or to
any variation thereof or to any penalty with respect to the
maintenance or fulfillment of its obligations under this
subsection 2.8, whether directly or by such being imposed on
or suffered by the Issuing Lender or any Lender;
(b) any reserve, special deposit, premium, FDIC
assessment, capital adequacy or similar requirement is or
shall be applicable, imposed or modified in respect of any
Letters of Credit issued by the Issuing Lender or partici-
pations therein purchased by any Lender; or
(c) there shall be imposed on the Issuing Lender or
any Lender any other condition regarding this subsection
2.8, any Letter of Credit or any participation therein;
and the result of the foregoing is to directly or indirectly
increase the cost to the Issuing Lender or any Lender of issuing,
making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or to reduce the amount
receivable in respect thereof by the Issuing Lender or any
Lender, then and in any such case the Issuing Lender or such
Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced,
notify Borrower and Agent in writing and provide appropriate
proof of such cost, and Borrower shall pay within five (5)
Business Days of the date of such notice such amounts as the
Issuing Lender or such Lender may specify to be necessary to
compensate the Issuing Lender or such Lender for such additional
cost or reduced receipt, together with interest on such amount
from the date demanded until payment in full thereof at a rate
equal at all times to the Base Rate plus 1.00% per annum. The
determination by the Issuing Lender or any Lender, as the case
may be, of any amount due pursuant to this subsection 2.8G as set
forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of error, be final and
conclusive and binding on all of the parties hereto; provided
that no payment shall be required under this subsection 2.8G for
any increased cost incurred or reduced amount received by a
Lender more than 180 days prior to the date demand for payment on
account of such increased cost or reduced amount is given by such
lender under this subsection 2.8G.
H. Indemnification; Nature of Issuing Lender's
Duties. In addition to amounts payable as elsewhere provided in
this subsection, Borrower hereby agrees to protect, indemnify,
pay and save harmless the Issuing Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges
and expenses (including reasonable attorneys' fees and allocated
costs of internal counsel) which the Issuing Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit, including, without limitation,
the payment of draws thereunder, other than as a result of gross
negligence or willful misconduct of the Issuing Lender as deter-
mined by a court of competent jurisdiction or (ii) the failure of
the Issuing Lender to honor a drawing under any Letter of Credit
as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called
"Government Acts"). Each Lender, proportionately to its Pro Rata
Share of the Commitments, severally agrees to indemnify Issuing
Lender to the extent Issuing Lender shall not have been ▇▇▇▇-
bursed by Holdings or its Subsidiaries (other than as a result of
Issuing Lender's gross negligence or willful misconduct), for and
against any of the foregoing claims, demands, liabilities,
damages, losses, costs, charges and expenses to which Issuing
Lender is entitled to reimbursement from Holdings or its Subsidi-
aries.
As between Borrower and the Issuing Lender, Borrower
assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by the Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the Issuing Lender shall not be
responsible (absent gross negligence or willful misconduct (as
determined by a court of competent jurisdiction)): (i) for the
form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with
the application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective
for any reason; (iii) for failure of the beneficiary of any such
Letter of Credit to comply fully with conditions required in
order to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) for errors in interpreta-
tion of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) for the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of any drawing under such
Letter of Credit; (viii) for any consequences arising from causes
beyond the control of the Issuing Lender, including, without
limitation, any Government Acts and (ix) any special, consequen-
tial, indirect or incidental damages, including, but not limited
to, lost profits arising out of or in connection with the issu-
ance of any Letter of Credit or any action taken or not taken by
the Issuing Lender in connection with any Letter of Credit, or
any document or property referred to in or related to any Letter
of Credit. None of the above shall affect, impair, or prevent
the vesting of any of the Issuing Lender's rights or powers
hereunder.
In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken
or omitted by the Issuing Lender under or in connection with the
Letters of Credit issued by it or the related certificates, if
taken or omitted in good faith and absent gross negligence or
willful misconduct of the Issuing Lender (as determined by a
court of competent jurisdiction), shall not put the Issuing
Lender under any resulting liability to Borrower.
Notwithstanding anything to the contrary contained in
this subsection, Borrower shall have no obligation to indemnify
the Issuing Lender in respect of any liability incurred by the
Issuing Lender arising solely out of the gross negligence or
willful misconduct of the Issuing Lender as determined by a court
of competent jurisdiction, or out of the wrongful dishonor by the
Issuing Lender of a proper demand for payment made under the
Letters of Credit.
For purposes of this subsection 2.8H, the term "Issuing
Lender" means the Issuing Lender and any Lender purchasing a
participation in any Letter of Credit pursuant to subsection
2.8D.
I. Computation of Interest and Fees. Interest and
fees payable pursuant to this subsection 2.8 shall be computed on
the basis of a 360-day year and the actual number of days elapsed
in the period during which it accrues.
2.9 Taxes
A. Taxes. Any and all payments or reimbursements
made under this Agreement or under the Notes shall be made free
and clear of and without deduction for any and all taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto excluding (i) taxes imposed on the overall
income (whether gross or net) or capital of a Lender or Agent by
the jurisdiction in which the Lender or Agent is organized,
resident or doing business and (ii) taxes, levies, imposts,
deductions, charges or withholdings which are imposed by laws,
treaties or regulations in effect as of the Closing Date;
provided, however, that any changes in laws, treaties or regula-
tions or the interpretation thereof applicable to financial
institutions generally after the Closing Date shall not be
excluded pursuant to this clause (ii) (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").
If Borrower shall be required by law to deduct any
Taxes from or with respect to any sum payable hereunder to any
Lender or Agent, then the sum payable shall be increased as may
be necessary so that, after making all required deductions, such
Lender or Agent receives an amount equal to the sum it would have
received had no such deductions been made.
B. Foreign Lenders. Each Lender organized under the
laws of a jurisdiction outside the United States (referred to in
this subsection 2.9B as a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt
from United States withholding tax under an applicable statute or
tax treaty shall provide to Borrower and Agent (i) a properly
completed and executed Internal Revenue Service form 4224 or Form
1001 or other applicable form, certificate or document prescribed
by the Internal Revenue Service of the United States certifying
as to such Foreign Lender's entitlement to such exemption with
respect to payments to be made to such Foreign Lender under this
Agreement and under the Notes (referred to in this subsection
2.9B as a "Certificate of Exemption") or (ii) a letter from any
such Foreign Lender stating that it is not entitled to any such
exemption (referred to in this subsection 2.9B as "Letter of
Non-Exemption"). Prior to becoming a Lender under this Agreement
and within 15 days after a reasonable written request of Borrower
or Agent from time to time thereafter, each Foreign Lender that
becomes a Lender under this Agreement shall provide a Certificate
of Exemption or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Bank under this
Agreement and does not provide a Certificate of Exemption to
Borrower and Agent within the time periods set forth in the
preceding paragraph, Borrower shall withhold taxes from payments
to such Foreign Lender at the applicable statutory rates and
Borrower shall not be required to pay any additional amounts as a
result of such withholding as provided in subsection 2.9A;
provided, however, that all such withholding and associated
limitations in payment under subsection 2.9A shall cease upon
delivery by such Foreign Lender of a Certificate of Exemption to
Borrower and Agent.
2.10 Superpriority of Obligations
All Obligations under the Loan Documents shall (a) be
unsecured, be senior in right of payment and priority of distri-
bution to any other obligations of Borrower and Holdings with
respect to payments or distributions to be made from Borrower's
merchandise inventory and proceeds thereof arising subsequent to
the Petition Date and (b) constitute allowed administrative
expense claims against Borrower and Holdings in the Chapter 11
Cases with priority under Section 364(c)(1) of the Bankruptcy
Code over any and all other administrative expenses of the kind
specified or ordered pursuant to any provision of the Bankruptcy
Code, including, but not limited to, Sections 105, 326, 328, 330,
331, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy
Code; provided that, upon the occurrence and during the continu-
ance of an Event of Default under this Agreement or the exercise
of any Agent or any Lender of its remedies after an Event of
Default, such claims shall be subject to: (i) unpaid professional
fees and expenses allowed in the Chapter 11 Cases in an aggregate
amount (determined without regard to fees and expenses awarded or
otherwise paid on an interim basis) not to exceed $500,000; and
(ii) fees payable to the United States Trustee pursuant to 28
U.S.C. Section 1930(a)(6).
2.11 Replacement of Lenders
If any Lender requests compensation pursuant to
subsection 2.6B, 2.6C, 2.6H or 2.8G or Section 2.7 or 2.9 , then
Borrower may, within 60 days of such request, cause another
Person (the "Replacement Lender") to assume all of such Lender's
Commitments and other obligations hereunder and under the other
Loan Documents and, upon such assumption in accordance with this
Section 2.11, the Replacement Lender shall be a Lender under this
Agreement and the other Loan Documents; provided that (i) the
Replacement Lender shall be a bank, financial institution or
other "accredited investor" (as defined in the Securities Act of
1933, as amended) approved by Agent, which approval shall not be
unreasonably withheld, (ii) prior to or concurrently with the
effectiveness of such assumption, the Replacement Lender and
Borrower shall have (a) executed and delivered all documents
reasonably required by Agent to effect such assumption, including
all documents reasonably required by Agent to terminate the
Commitments and other obligations under the Loan Documents of the
Lender to be replaced (the "Replaced Lender") and (b) paid all
amounts due under the Loan Documents to the Replaced Lender
(including, without limitation, all principal in respect of the
Loans made by the Replaced Lender, all accrued and unpaid fees,
interest and commissions and all amounts payable pursuant to
subsections 2.6B, 2.6C, 2.6.H and 2.8G and Sections 2.7 and 2.9)
and (iii) prior to or concurrently with the effectiveness of such
assumption, Borrower shall have paid to Agent a processing and
recordation fee of $3,500.
SECTION 3. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the other
extensions of credit hereunder are subject to the satisfaction of
all of the following conditions on or before the date of the
initial borrowing hereunder (the "Initial Borrowing Date"):
3.1 Conditions to Loans
The obligations of Lenders to make the Loans are, in
addition to the conditions precedent specified in subsection 3.2,
subject to prior or concurrent satisfaction of the following
conditions:
A. Holdings Documents. On or before the Initial
Borrowing Date, Holdings shall deliver to Agent and Lenders (or
to Agent for Lenders with sufficient originally executed copies
for each Lender) each, unless otherwise noted, dated the Initial
Borrowing Date:
1. Copies of its Certificate of Incorporation,
certified as of the Initial Borrowing Date by its corporate
secretary or an assistant secretary;
2. Copies of its Bylaws, certified as of the Initial
Borrowing Date by its corporate secretary or an assistant
secretary;
3. Resolutions of its Board of Directors approving
and authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a
party, and approving and authorizing any documents, instru-
ments or certificates to be executed by it in connection
with this Agreement and the other Loan Documents to which it
is a party or with respect to which it has assumed obliga-
tions, all in form and substance satisfactory to Agent and
its counsel, each certified as of the Initial Borrowing Date
by its corporate secretary or an assistant secretary as
being in full force and effect without modification or
amendment;
4. Signature and incumbency certificates of its
officers executing this Agreement and the other Loan Docu-
ments to which it is a party and any documents, instruments
or certificates to be executed by it in connection there-
with;
5. Executed copies of this Agreement and the other
Loan Documents to which it is a party;
6. Good standing certificates, including certifica-
tion of tax status, certified by the Secretary of State of
Delaware and each of the principal places of business, each
dated a recent date prior to the Initial Borrowing Date; and
7. Such other documents as Agent or any Lender may
reasonably request.
B. Borrower Documents. On or before the Initial
Borrowing Date, Borrower shall deliver to Agent and Lenders (or
to Agent for Lenders with sufficient originally executed copies
for each Lender) each, unless otherwise noted, dated the Initial
Borrowing Date:
1. Certified copies of its Certificate of Incorpora-
tion, certified by the Secretary of State of its jurisdic-
tion of incorporation as of a recent date prior to the
Initial Borrowing Date and certified as of the Initial
Borrowing Date by its corporate secretary or an assistant
secretary;
2. Copies of its Bylaws, certified as of the Initial
Borrowing Date by its corporate secretary or an assistant
secretary;
3. Resolutions of its Board of Directors approving
and authorizing the dividend and/or loan to Holdings contem-
plated by this Agreement and approving and authorizing the
execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party, the execu-
tion, delivery and payment of the Notes and approving and
authorizing any documents, instruments or certificates
required to be executed by it in connection with this Agree-
ment and the other Loan Documents to which it is a party,
all in form and substance satisfactory to Agent and its
counsel, all certified as of the Initial Borrowing Date by
its corporate secretary or an assistant secretary as being
in full force and effect without modification or amendment;
4. Signature and incumbency certificates of its
officers executing this Agreement and the other Loan
Documents to which it is a party, the Notes, and any
documents, instruments or certificates to be delivered in
connection therewith;
5. Executed copies of this Agreement and the other
Loan Documents to which it is a party;
6. Good standing certificates, including certifica-
tion of tax status, certified by the Secretary of State of
Delaware and each of its principal places of business (other
than Iowa and North Dakota), each dated a recent date prior
to the Initial Borrowing Date; and
7. A letter from Borrower to Agent describing the
actions required to cause Borrower to be in good standing in
Iowa and North Dakota and the estimated time required to
complete each such action.
8. Such other documents as Agent or any Lender may
reasonably request.
C. Interim Order. The Interim Borrowing Order shall
have been entered by the Court, shall be in full force and effect
and shall not be stayed.
D. Representations of Holdings and Borrower.
Holdings and Borrower shall have delivered to Agent an Officers'
Certificate in form and substance satisfactory to Agent to the
effect that (i) the representations and warranties in Section 4
hereof pertaining to such Person are true, correct and complete
in all material respects on and as of the Initial Borrowing Date
to the same extent as though made on and as of that date, (ii)
since July 31, 1995 through the Initial Borrowing Date there has
been no change in the prospects of Borrower or its Subsidiaries
which has been materially adverse to Borrower or Borrower and its
Subsidiaries taken as a whole other than the commencement of the
Chapter 11 Cases.
E. Performance of Agreements. Each of the Loan
Parties shall have performed all agreements which this Agreement
provide shall be performed on or before the Initial Borrowing
Date except as otherwise disclosed to and agreed to in writing by
Agent.
F. Payment of Fees. On or before the Initial
Borrowing Date, Holdings shall have paid or cause to have been
paid to Agent for distribution (as appropriate) to Lenders and
Agent, or to be paid to Lenders directly, the fees payable on the
Closing Date referred to in subsection 2.3.
G. Opinions from Counsel to Loan Parties. Agent,
Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written
opinions of special counsel for Holdings and Borrower, in form
and substance reasonably satisfactory to Agent and its counsel,
dated as of the Initial Borrowing Date, and setting forth
substantially the matters in the opinion designated in Exhibit
VII annexed hereto.
H. Initial Borrowing Base. On or before the Initial
Borrowing Date, Agent shall have received the initial Borrowing
Base Certificate dated not more than three days prior to the
Initial Borrowing Date or such earlier date as is acceptable to
Agent in its sole discretion.
I. Other Corporate Actions. On or before the Initial
Borrowing Date, all corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby
and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and their
counsel shall be reasonably satisfactory in form and substance to
Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of
such documents as Agent or any Lender may reasonably request.
3.2 Conditions to All Loans
The obligations of Lenders to make any and all Loans on
each Funding Date are subject to the following further conditions
precedent:
A. Notice of Borrowing. Agent shall have received,
in accordance with the provisions of subsections 2.1B, as the
case may be, before that Funding Date, an originally executed
Notice of Borrowing in each case signed by the Chief Executive
Officer, the Chief Financial Officer, the Treasurer or the Vice
President and Controller of Borrower or by any executive officer
of Borrower designated by any of the above-described officers on
behalf of Borrower in writing delivered to Agent.
B. Conditions to Funding. As of that Funding Date:
(i) The representations and warranties contained
herein shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent
as though made on and as of that date, except to the extent
such representations and warranties specifically relate to
an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all
material respects on and as of such earlier date;
(ii) No event shall have occurred and be continu-
ing or would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute (a) an Event of Default or (b) a Potential Event
of Default;
(iii) Holdings and its Subsidiaries shall have
performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall
be performed by them on or before that Funding Date;
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin
or restrain any Lender from making that Loan;
(v) There shall not be pending or, to the know-
ledge of Holdings or Borrower, threatened, any action, suit,
proceeding, governmental investigation or arbitration
against or affecting Holdings or any of its Subsidiaries or
any property of Holdings or any of its Subsidiaries, that
could reasonably be expected to result in a Material Adverse
Effect that has not been disclosed by Holdings or Borrower
in writing pursuant to subsection 4.6 or 5.1(viii) prior to
the making of the last preceding Loans (or, in the case of
the initial Loans, prior to the execution of this Agreement)
and there shall not have occurred any development in any
action, suit, proceeding, governmental investigation or
arbitration that could reasonably be expected to result in a
Material Adverse Effect that has not been so disclosed prior
to the making of the last preceding Loans. No injunction or
other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to
be issued shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or
obtain relief as a result of this Agreement or the making of
Loans hereunder; and
(vi) The advance requested shall not cause the
aggregate outstanding amount of the Obligations to exceed
the amount then authorized by the Interim Borrowing Order or
the Final Borrowing Order, as the case may be, and the
Interim Borrowing Order or the Final Borrowing Order, as the
case may be, shall be in full force and effect and shall not
be stayed.
3.3 Conditions to Letters of Credit
The obligation of any Issuing Lender to issue or extend
any Letter of Credit hereunder is subject to prior or concurrent
satisfaction of all of the following conditions:
A. On or before the date of issuance of such Letter
of Credit, the Issuing Lender with respect thereto shall have
received, in accordance with the provisions of subsection 2.8B, a
notice requesting the issuance of such Letter of Credit and all
other information specified in subsection 2.8B, and such other
documents as such Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
B. On the date of issuance or extension of such
Letter of Credit, all conditions precedent described in
subsection 3.2B shall be satisfied to the same extent as though
the issuance or extension of such Letter of Credit were the
making of a Loan and the date of issuance or extension of such
Letter of Credit were a Funding Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Agent and Lenders to enter into this
Agreement, Holdings and Borrower each represent and warrant to
Agent and each Lender that the following statements are true,
correct and complete:
4.1 Organization, Powers, Good Standing, Business and
Subsidiaries
A. Organization and Powers. Each of Holdings and its
Subsidiaries is a corporation duly organized and validly existing
under the laws of the state of its jurisdiction of incorporation
and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted
and proposed to be conducted, to enter into this Agreement, and
each Loan Document to which it is a party, to issue the Notes (in
the case of Borrower) or with respect to which it has assumed any
obligations and to carry out the transactions contemplated hereby
and thereby.
B. Good Standing. Each of Holdings and its Subsidi-
aries is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the
character of its activities requires such qualification, except
where the failure to so qualify has not had and could not reason-
ably be expected to have a Material Adverse Effect. Schedule
4.1B annexed hereto lists each state in which Holdings or any of
its Subsidiaries is qualified to transact business as a foreign
corporation or has any stores.
C. Conduct of Business. Holdings and its Subsidia-
▇▇▇▇ are engaged only in the businesses permitted to be engaged
in pursuant to subsection 6.12.
D. Subsidiaries. All of the direct and indirect
Subsidiaries of Holdings, as of the date of this Agreement, are
identified in Schedule 4.1D annexed hereto. The capital stock of
each of the Subsidiaries identified in Schedule 4.1D is duly
authorized, validly issued, fully paid and nonassessable. The
capital stock of each such Person identified on Schedule 4.1D is
not Margin Stock. Schedule 4.1D correctly sets forth the owner-
ship interest as of the date hereof of Holdings in each of its
direct and indirect Subsidiaries.
E. Ownership. As of the date hereof and at the
Closing Date, all of the common stock of Borrower is and will be
owned by Holdings.
4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution,
delivery and performance of this Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby
(i) have been duly authorized by all necessary corporate action
by each Loan Party and (ii) by the Closing Date will be duly
authorized by the Court.
B. No Conflict. The execution, delivery and perform-
ance by Holdings and its Subsidiaries of the Loan Documents and
the issuance, delivery and payment by Borrower of the Notes and
the consummation of the transactions contemplated hereby and
thereby do not and will not (i) subject to Court approval,
violate any provision of law applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or
Bylaws of Holdings or any of its Subsidiaries, or any order,
judgment or decree of any court or other agency of government
binding on Holdings or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation
of Holdings or any of its Subsidiaries (performance or enforce-
ability of which has not been excused by the Bankruptcy Code or
an applicable order of the Court), except Contractual Obligations
for which approvals or consents will be obtained on or before the
Closing Date and except breaches, conflicts and defaults which
could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (iii) result in or require
the creation or imposition of any Lien upon any of the properties
or assets of Holdings or any of its Subsidiaries, or (iv) require
any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Holdings or any of its
Subsidiaries (performance of which has not been excused by the
Bankruptcy Code or an applicable order of the Court), except for
such approvals or consents which will be obtained on or before
the Closing Date.
C. Governmental Consents. The execution, delivery
and performance by Holdings and its Subsidiaries of this Agree-
ment, the other Loan Documents to which each is a party and
application of the proceeds of the Loans, and the consummation of
the transactions contemplated hereby and thereby do not and will
not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any Federal, state or
other governmental authority or regulatory body, except for
consents, approvals, notices and actions that have been or will
be obtained or taken on or before the Closing Date or which the
failure to so obtain or take could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect.
D. Binding Obligation. Upon Court approval, this
Agreement and the other Loan Documents are the legally valid and
binding obligations of Holdings and its Subsidiaries party
thereto, enforceable against Holdings and its Subsidiaries party
thereto in accordance with their respective terms.
4.3 Financial Condition
Holdings has heretofore delivered to Lenders the
following materials: (i) audited consolidated balance sheet of
Holdings and its Subsidiaries as at January 31, 1995 and the
related audited consolidated statements of operations, share-
holders' equity and cash flow of Holdings and its Subsidiaries
for the fiscal year of Holdings ending on such date (including
any comment letter submitted by the accountants in connection
therewith) and (ii) unaudited consolidated balance sheets of
Holdings and its Subsidiaries as at July 31, 1995 and the related
consolidated statements of operations of Holdings and its
Subsidiaries for the fiscal period ended on such date. Such
statements, except as otherwise stated in such statements and the
notes thereto, fairly present the consolidated financial position
of Holdings and its Subsidiaries as at such dates and the conso-
lidated results of operations and the cash flow of Holdings and
its Subsidiaries for the periods then ended, subject, in the case
of any unaudited financial statements, to changes resulting from
normal year-end adjustments. Neither Holdings nor any of its
Subsidiaries has any material (a) Contingent Obligation, (b)
contingent liability or liability for taxes, (c) long-term lease
or (d) unusual forward or long-term commitment that is not
reflected in the most recent financial statements (including the
notes thereto) delivered pursuant to subsection 4.3 or 5.1 of
this Agreement other than Contingent Obligations, contingent
liabilities or liabilities for taxes, long-term leases or forward
or long-term commitments incurred in the ordinary course of
business.
4.4 No Material Adverse Change; No Stock Payments
Since July 31, 1995, no event or change has occurred
that has caused, either in any case or in the aggregate, a
Material Adverse Effect other than the commencement of the
Chapter 11 Cases and the occurrence of the events described on
Schedule 4.4 hereof. Neither Holdings nor any of its Subsidia-
▇▇▇▇ has directly or indirectly declared, ordered, paid or made
or set aside any sum or property for any payment prohibited by
subsection 6.5 or agreed to do so.
4.5 Title to Properties; Liens
Each of the Loan Parties and their respective Subsidia-
▇▇▇▇ has good, sufficient and legal title, subject only to
Permitted Encumbrances, Liens securing obligations under the
Prepetition Credit Agreement, Liens permitted pursuant to
subsection 6.2 and Liens consented to by Agent and Requisite
Lenders, to all their respective properties and assets reflected
in the most recent consolidated balance sheet referred to in
subsection 4.3 or in the most recent financial statements
delivered pursuant to subsection 5.1 of this Agreement, except
for assets acquired or disposed of in the ordinary course of
business since the date of such consolidated balance sheet.
Except for Permitted Encumbrances, Liens permitted pursuant to
subsection 6.2 or Liens consented to by Agent and Requisite
Lenders, all such properties and assets are free and clear of
Liens.
4.6 Litigation; Adverse Facts
Except as set forth on Schedule 4.6 annexed hereto,
there is no action, suit, proceeding, governmental investigation
or arbitration (whether or not purportedly on behalf of Holdings
or any of its Subsidiaries) at law or in equity or before or by
any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to the knowledge of Holdings or any of its
Subsidiaries, threatened against or affecting Holdings or any of
its Subsidiaries or any property of Holdings or any of its
Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect. As of the Closing Date, none of
Holdings or any of its Subsidiaries has received any notice of
termination of any material contract, lease or other agreement or
suffered any material damage, destruction or loss (whether or not
covered by insurance) or had any employee strike, work-stoppage,
slow-down or lock-out or any substantial, nonfrivolous threat
directed to it of any imminent strike, work-stoppage, slow-down
or lock-out, any of which remain pending, that could reasonably
be expected to result in a Material Adverse Effect.
4.7 Payment of Taxes
Except to the extent permitted by subsection 5.3 and to
the extent payment has been excused by the Bankruptcy Code or an
applicable order of the Court, all material tax returns and
reports of Holdings and each of its Subsidiaries required to be
filed by any of them have been timely filed, and all material
taxes, assessments, fees and other governmental charges upon such
Persons and upon their respective properties, assets, income and
franchises which are due and payable have been paid when due and
payable, except to the extent permitted by subsection 5.3.
Neither Holdings nor any of its Subsidiaries knows of any
proposed tax assessment against any such Person that could
reasonably be expected to result in a Material Adverse Effect,
which is not being actively contested by such Person to the
extent affected thereby, in good faith and by appropriate
proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
4.8 Materially Adverse Agreements; Performance of
Agreements
A. Neither Holdings nor any of its Subsidiaries is a
party to or is subject to any material agreement or instrument
materially and adversely affecting the financial condition of
Holdings and its Subsidiaries taken as a whole, except as other-
wise disclosed in writing to Agent and Lenders.
B. Except as excused by the Bankruptcy Code or
applicable order of the Court, neither Holdings nor any of its
Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation of any such Person
(incurred, with respect to Holdings or Borrower, during the
pendency of the Chapter 11 Cases), and no condition exists that,
with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct
or indirect, of such default or defaults or the consequences of
actions curing such default or defaults, if any, could not
reasonably be expected to result in a Material Adverse Effect.
4.9 Governmental Regulation
Neither Holdings nor any of its Subsidiaries is subject
to regulation under the Public Utility Holdings Company Act of
1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or to any Federal or state statute
or regulation limiting its ability to incur Indebtedness for
money borrowed or to create Liens on any of its properties or
assets to secure such Indebtedness.
4.10 Securities Activities
Neither any Loan Party nor any of their respective
Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock.
4.11 Employee Benefit Plans
A. Except as set forth in Schedule 4.11 annexed
hereto, Holdings and each of its Subsidiaries are in material
compliance with all applicable provisions and requirements of
Title I, II and IV of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit
Plan, and have performed all their obligations under each
Employee Benefit Plan in all material respects.
B. No ERISA Event has occurred or is reasonably
expected to occur.
C. Except to the extent required under Section 4980B
of the Internal Revenue Code or except as described on Schedule
4.11 annexed hereto, no Employee Benefit Plan provides health or
welfare benefits (through the purchase of insurance or otherwise)
for any retired or former employee of Holdings or any of its
Subsidiaries.
D. As of the most recent valuation date for any
Pension Plan (excluding Pension Plans in which no employees of
Holdings or any of its Subsidiaries have ever participated as an
employee of Holdings or one of its Subsidiaries), the excess of
the aggregated accumulated benefit obligations, as defined in
Statement of Financial Accounting Standards No. 87 (the "ABO"),
over the aggregate total fair market value for all such Pension
Plans (excluding for purposes of such computation any Pension
Plans with respect to which the fair market value of the assets
exceeds the ABO), does not exceed $1,000,000.
4.12 Disclosure
No representation or warranty of Holdings or any of its
Subsidiaries contained in this Agreement or any other document,
certificate or written statement furnished to Lenders by or on
behalf of Borrower for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact (known to either
Holdings or any of its Subsidiaries in the case of any document
not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made as of the time the same
were made. The projections and pro forma financial information
contained in such materials are based upon good faith estimates
and assumptions believed by Holdings and its Subsidiaries to be
reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as
facts and that actual results during the period or periods
covered by any such projections may differ from the projected
results. There is no fact known to Holdings or any of its
Subsidiaries (other than matters of a general economic nature)
that could reasonably be expected to result in a Material Adverse
Effect that has not been disclosed herein or in such other
documents, certificates and statements furnished to Agent or
Lenders for use in connection with the transactions contemplated
hereby.
4.13 Licenses, Permits and Authorizations
Holdings and each of its Subsidiaries has all approv-
als, licenses or other permits of all governmental or regulatory
agencies, whether Federal, state or local, the absence of which
could reasonably be expected to result in a Material Adverse
Effect.
4.14 Intangible Property
Except as set forth on Schedule 4.14 annexed hereto,
Holdings and each of its Subsidiaries is the sole and exclusive
owner or licensee of all trade names, unregistered trademarks and
service marks, brand names, registered trademarks and service
marks, and all applications for any of the foregoing, and all
permits, grants and licenses or other rights with respect thereto
used in or necessary for the conduct of their respective
businesses as currently conducted, the absence of which could
reasonably be expected to result in a Material Adverse Effect.
Neither Holdings or any of its Subsidiaries has been charged with
any material infringement of any intangible property of the
character described above or been notified or advised of any
material claim of any other Person relating to any of the
intangible property, other than as set forth in Schedule 4.14
annexed hereto.
4.15 Environmental Matters
A. Disclosure. Except as set forth in Schedule 4.15:
(i) the operations of Holdings and each of its
Subsidiaries (including, without limitation, all operations
and conditions at or in the Facilities) comply in all
material respects with all Environmental Laws;
(ii) Holdings and each of its Subsidiaries have
obtained all environmental, health and safety permits
necessary to their respective operations, and all such
permits are in good standing, and Holdings and each of its
Subsidiaries are in compliance with all material terms and
conditions of such permits;
(iii) neither Holdings nor any of its Subsidiaries
has received (A) any written notice or claim to the effect
that it is or may be liable in any material respect to any
Person as a result of the Release or threatened Release of
any Hazardous Materials or (B) any letter or request for
information under Section 104 of the Comprehensive Environ-
mental Response, Compensation, and Liability Act (42 U.S.C.
Section 9604) or comparable state laws, and to the best of
Holdings's or Borrower's knowledge, none of the operations
of Holdings or any of its Subsidiaries is the subject of any
federal or state investigation evaluating whether any
remedial action is needed to respond to a Release or
threatened Release of any Hazardous Material at any Facility
or at any other location;
(iv) none of the operations of Holdings or any of
its Subsidiaries is the subject of any pending judicial or
administrative proceeding alleging the material violation of
or material liability under any Environmental Laws;
(v) Holdings and each of its Subsidiaries and all
of their present Facilities or operations, as well as their
past Facilities or operations, are not subject to any out-
standing written order or agreement with any governmental
authority or private party respecting (A) any Environmental
Laws or (B) any Environmental Claims;
(vi) neither Holdings nor any of its Subsidiaries
has any material Contingent Obligation in connection with
any Release of any Hazardous Materials by Holdings or any of
its Subsidiaries;
(vii) neither Holdings nor any of its Subsidiaries
or any predecessor of Holdings or of any Subsidiary has
filed any notice under any Environmental Law indicating past
or present treatment, storage, or disposal of Hazardous
Materials at any Facility (other than hazardous waste
manifests in the ordinary course of business), none of
Holdings's or any of its Subsidiary's operations involves
the generation, transportation, treatment or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or
any state equivalent and neither Holdings nor any Subsidi-
aries nor, to the best of Holdings's and Borrower's know-
ledge, any predecessor in title to any of them nor, any
third party at any time occupying any Facility has at any
time used, generated, disposed of, stored, transported to or
from, released or threatened the release of any Hazardous
Materials, in any form, quantity or concentration on, from,
under or affecting such Facility in a manner that could
reasonably expect to result in material liability of or
material claim against Holdings or any of its Subsidiaries;
(viii) no underground storage tanks or surface
impoundments are on or at the Facilities; and
(ix) no Lien in favor of any governmental author-
ity for (A) any liability under Environmental Laws, or (B)
damages arising from or costs incurred by such governmental
authority in response to a Release has been filed or
attached to the Facilities.
B. No Material Adverse Effect. No Hazardous Materi-
als exist on, under or about any Facility in a manner that could
reasonably be expected to give rise to an Environmental Claim
having a Material Adverse Effect and neither Holdings nor any of
its Subsidiaries has filed any notice or report of a Release of
any Hazardous Materials that could reasonably be expected to give
rise to an Environmental Claim having a Material Adverse Effect
and no matter disclosed on Schedule 4.15 could reasonably be
expected to give rise to an Environmental Claim having a Material
Adverse Effect.
SECTION 5. AFFIRMATIVE COVENANTS
Holdings and Borrower each covenant and agree that, so
long as any of the Commitments hereunder shall be in effect or
any Letter of Credit remain outstanding and until payment in full
of all of the Loans and all other amounts owing hereunder unless
Requisite Lenders shall otherwise give prior written consent,
such Person shall perform all covenants in this Section 5.
5.1 Financial Statements and Other Reports
Holdings will maintain, and cause each of its Subsidi-
aries to maintain, a system of accounting established and
administered in accordance with sound business practices to
permit preparation of financial statements in conformity with
GAAP. Holdings will deliver to Agent and Lenders:
(i) as soon as practicable and in any event
within thirty (30) days after the end of each Fiscal Month
(a) a detailed balance sheet as of the end of such Fiscal
Month and income statement (including, without limitation,
statements of sales and gross margin by revenue category,
including rentals, merchandise sales and ticket sales) and
statements of Consolidated Adjusted EBITDAV, Consolidated
Capital Expenditures, Consolidated Operating Lease Expense,
Financial Accounting Standards Board Statement No. 13 amor-
tization and the non-cash portion of the cost of rentals for
Borrower for such Fiscal Month and for the period from the
beginning of the current Fiscal Year to the end of such
Fiscal Month, (b) a listing of new stores opened and of
existing stores closed in the period, and (c) a brief
written discussion of the financial and operating perform-
ance for such Fiscal Month and the major factors affecting
such performance, in each case (other than the balance sheet
and the written discussion) setting forth in comparative
form figures or the corresponding information for the
corresponding periods of the previous Fiscal Year, all in
reasonable detail and certified by the Chief Financial
Officer, Treasurer or Controller of Borrower that they
fairly present the financial condition of Borrower as at the
dates indicated and the results of their operations for the
periods indicated, subject to changes resulting from audit
and year-end adjustment;
(ii) as soon as practicable and in any event
within ninety (90) days after the end of each Fiscal Year,
(a) a written discussion of the financial and operating
performance for the Fiscal Year from a profit and loss, cash
flow and balance sheet standpoint and discussions of the
major factors affecting such performance (b) consolidated
and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such Fiscal Year and the
related consolidated and consolidating statements of income
of Holdings and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the ▇▇▇▇▇▇▇-
dated and consolidating figures for the previous Fiscal
Year, and (c) consolidated statements of stockholders'
equity and cash flow of Borrower and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative
form the consolidated figures for the previous Fiscal Year
and, in the case of the consolidated statements of cash
flow, the corresponding figures for such Fiscal Year from
the financial budget delivered pursuant to subsection
5.1(xi), and (d) a schedule of all letters of credit, all in
reasonable detail and accompanied by a report on such
financial statements of Ernst & Young or other independent
certified public accountants of recognized national standing
selected by Holdings as shall be satisfactory to Agent which
report shall not be qualified as to scope of audit and shall
state that such consolidated financial statements present
fairly the financial position of Holdings and its Subsidi-
aries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with
prior years (except as otherwise stated therein) and that
the examination by such accountants in connection with such
consolidated financial statements has been made in accord-
ance with generally accepted auditing standards;
(iii) within fifteen (15) days after the end of
each Fiscal Month, upon the closure of or sale of all or
substantially all of the assets of any store, from time to
time upon the request of Agent and at any other date
Borrower may choose, a Borrowing Base Certificate as of the
last date of such period, the date of such closure or sale
or the date so requested, as the case may be;
(iv) together with each delivery of financial
statements of Holdings and its Subsidiaries pursuant to
subdivisions (i) and (ii) above, (a) an Officers' Certifi-
cate of Holdings stating that the signers have reviewed the
terms of this Agreement and the other Loan Documents and
have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condi-
tion of Holdings and its Subsidiaries during that portion of
the accounting period covered by such financial statements
subsequent to the Closing Date and that such review has not
disclosed the existence during or at the end of such
accounting period, and that the signers do not have know-
ledge of the existence as of the date of the Officers'
Certificate, of any condition or event that constitutes an
Event of Default or Potential Event of Default, or, if any
such condition or event existed or exists, specifying the
nature and period of existence thereof and what action
Holdings has taken, is taking and proposes to take with
respect thereto; and (b) a Compliance Certificate demon-
strating in reasonable detail compliance during and at the
end of the applicable accounting periods with the restric-
tions contained in this Agreement in the manner set forth in
such Compliance Certificate;
(v) subject to any qualifications and limitations
required by the accountants, together with each delivery of
financial statements of Holdings and its Subsidiaries
pursuant to subdivision (ii) above, a written statement by
the independent public accountants giving the report thereon
(a) stating that their audit examination has included a
review of the terms of this Agreement and the other Loan
Documents as they relate to accounting matters, (b) stating
whether, in connection with their audit examination, which
audit was conducted in accordance with generally accepted
auditing standards, any condition or event that constitutes
an Event of Default or Potential Event of Default has come
to their attention, and if such a condition or event has
come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not
be liable by reason of any failure to obtain knowledge of
any such Event of Default or Potential Event of Default with
respect to accounting matters that would not be disclosed in
the course of their audit examination, and (c) stating that
based on their audit examination nothing has come to their
attention that causes them to believe that the information
contained in either or both the certificates delivered
therewith pursuant to subdivision (v) above is not correct
or that the matters set forth in the Compliance Certificate
delivered therewith pursuant to clause (b) of such subdivi-
sion (iv) above for that portion of the applicable Fiscal
Year are not stated in accordance with the terms of this
Agreement;
(vi) promptly upon any officer of Holdings or any
of its Subsidiaries obtaining knowledge (a) that a condition
or event has occurred and is continuing that constitutes an
Event of Default or Potential Event of Default, or becoming
aware that any Lender or Agent has given any notice or taken
any other action with respect to a claimed Event of Default
or Potential Event of Default under this Agreement, (b) that
any Person has given any notice to Holdings, Borrower or any
of their respective Subsidiaries or taken any other action
with respect to a claimed default, (c) of any condition or
event that would be required to be disclosed in a current
report filed by Borrower with the Securities and Exchange
Commission on Form 8-K pursuant to Items 1, 2, 4 or 5 of
such Form as in effect on the date hereof if Borrower were
required to file such reports under the Exchange Act, or (d)
of a Material Adverse Effect or of an event or condition
that could reasonably be expected to result in a Material
Adverse Effect (other than matters affecting the economy in
general), an Officers' Certificate specifying the nature and
period of existence of such condition or event, or specify-
ing the notice given or action taken by such holder or
Person and the nature of such claimed default, Event of
Default, Potential Event of Default, event or condition, and
what action Holdings or Borrower has taken, is taking and
proposes to take with respect thereto;
(vii) promptly upon any officer of Holdings or any
of its Subsidiaries obtaining knowledge of (a) the institu-
tion of, or non-frivolous, written threat of, any action,
suit, proceeding, governmental investigation or arbitration
against or affecting Holdings or any of its Subsidiaries or
any property of Holdings or any of its Subsidiaries not
previously disclosed by Holdings to Agent and Lenders or (b)
any material development in any such action, suit, proceed-
ing, governmental investigation or arbitration, that, in
either case, could reasonably be expected to result in a
Material Adverse Effect. Holdings shall promptly give
notice thereof to Agent and Lenders and provide such other
information as may be reasonably available to it to enable
Agent and Lenders and their counsel to evaluate such
matters;
(viii) promptly upon becoming aware of the occur-
rence of or forthcoming occurrence of any ERISA Event, a
written notice specifying the nature thereof, what action
Holdings or any of its ERISA Affiliates has taken, is taking
or proposes to take with respect thereto, and, when known,
any action taken or threatened in writing by the Internal
Revenue Service, the Department of Labor or the PBGC with
respect thereto;
(ix) with reasonable promptness copies of (a) each
Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by Holdings or any of its ERISA
Affiliates with the Internal Revenue Service with respect to
each Pension Plan (in which any employees of Holdings or any
of its Subsidiaries have ever participated as employees of
Holdings or one of its Subsidiaries) for which a Schedule B
is required to be filed; (b) all notices received by
Holdings or any of its ERISA Affiliates from a Multiemployer
Plan sponsor concerning an ERISA Event; and (c) copies of
such other documents or governmental reports or filings
relating to any Employee Benefit Plan as Agent or any Lender
shall reasonably request;
(x) (a) as soon as available and in any event by
the twenty-fifth (25th) day of each month, an inventory
rollforward analysis for the immediately preceding month, in
the form delivered to Agent prior to the Closing Date or
otherwise satisfactory in form to Agent, (b) as soon as
available and in any event by the fourth (4th) day of each
week, a merchandising and marketing key factors report for
the immediately preceding week, in each case in the form
delivered to Agent prior to the Closing Date or otherwise
satisfactory in form to Agent; and (c) from time to time,
such other Inventory reports as are reasonably requested by
Agent.
(xi) promptly upon their becoming available,
copies of all financial statements, reports, notices and
proxy statements sent or made available generally by
Holdings to holders of its Indebtedness or by any Subsidiary
of Holdings to holders of its Indebtedness other than
Holdings or another Subsidiary, of all proxy statements,
regular and periodic reports and all registration statements
and prospectuses, if any, filed by Holdings or any of its
Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental
authority succeeding to any of its functions, and of all
press releases and other statements made available generally
by Holdings or any Subsidiary to the public concerning
material developments in the business of Holdings and its
Subsidiaries;
(xii) promptly upon receipt thereof, copies of all
reports submitted to Holdings or any of its Subsidiaries by
independent public accountants in connection with each
annual, interim or special audit of the financial statements
of Holdings made by such accountants, including, without
limitation, the comment letter submitted by such accountants
to management in connection with their annual audit;
(xiii) at the time of the release thereof, a copy of
all material press releases to Agent and Lenders;
(xiv) promptly upon filing any such document,
copies of any pleading or document filed by Holdings or any
of its Subsidiaries with the Court or the Office of the
United States Trustee in the Chapter 11 Cases; and
(xv) within 30 days of the Closing Date, Borrower
shall deliver good standing certificates, including (if
generally available) verification of tax status, certified
by the Secretary of State of Iowa and North Dakota, respec-
tively; and
(xvi) with reasonable promptness, such other
information and data with respect to Holdings or any of its
Subsidiaries as from time to time may be reasonably
requested by Agent or Requisite Lenders.
5.2 Corporate Existence, etc.
Subject to subsection 6.7, Holdings and Borrower will
at all times preserve and keep in full force and effect their
respective corporate existence and rights and franchises material
to its respective business and those of each of its respective
Subsidiaries, the loss of which could reasonably be expected to
result in a Material Adverse Effect.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. Except as excused by the Bankruptcy Code or by an
applicable order of the Court, each Loan Party will, and will
cause each of its Subsidiaries to, pay or cause to be paid all
taxes, assessments and other governmental charges that constitute
administrative expenses in the Chapter 11 Cases imposed upon it
or any of its properties or assets or in respect of any of its
franchises, business, income or property before any material
penalty accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies)
for sums that have become due and payable and that by law have or
may become a material Lien upon any of its properties or assets,
prior to the time when any material penalty or fine shall be
incurred with respect thereto; provided that so long as no
property or assets (other than money for such charge or claim and
the interest or penalty accruing thereon) of Holdings or Borrower
or any of their respective Subsidiaries is in danger of being
lost or forfeited as a result thereof, no such charge or claim
need be paid if it is being contested in good faith by appropri-
ate proceedings promptly instituted and diligently conducted and
if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made
therefor.
B. Each Loan Party will not, nor will it permit any of
its Subsidiaries to, file or consent to the filing of any
consolidated federal income tax return with any Person other than
Holdings or any of its Subsidiaries.
5.4 Maintenance of Properties; Insurance
Borrower will maintain or cause to be maintained in
good repair, working order and condition (ordinary wear and tear
excepted) all material properties used in the business of
Borrower and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Borrower
will maintain or cause to be maintained, with financially sound
and reputable insurers, insurance with respect to its properties
and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against
by corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types
(including, without limitation, product liability and bodily
injury insurance) and in such amounts as are customarily carried
under similar circumstances by such other corporations. Each
such policy of insurance shall provide for at least thirty (30)
days prior written notice to Agent of any modification or
cancellation of such policies. Upon the Closing Date and on each
September 1st thereafter, Holdings and its Subsidiaries shall
submit to Agent an Officers' Certificate setting forth in detail
the type and amount of insurance maintained pursuant to this
subsection which shall not be materially less than the type and
amount maintained on the Closing Date.
5.5 Inspection; Lender Meeting
Holdings and its Subsidiaries shall permit any author-
ized representatives designated by Agent or any Lender to visit
and inspect any of the properties of Holdings and its Subsidi-
aries, including its and their financial and accounting records,
and to make copies and take extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their
officers and independent public accountants, all upon reasonable
notice and at reasonable times during normal business hours and
as often as may be reasonably requested. Without in any way
limiting the foregoing, Borrower will participate in an annual
meeting of Agent and Lenders to be held at such place and time as
may be agreed to by Borrower and Agent. Agent and Lenders shall
hold all non-public information obtained pursuant to this
subsection 5.5 and identified by Borrower as confidential in
accordance with its and their customary procedures for handling
confidential information of this nature.
In addition to, and not in limitation of, the immedi-
ately preceding paragraph, a representative designated by Agent
shall, at Borrower's expense, and after reasonable notice and
during normal business hours, be permitted to audit and monitor
Borrower's Inventory in order to, among other things, verify the
calculation of the Borrowing Base.
5.6 Equal Security for Obligations; No Further
Negative Pledges
A. If Holdings or any of its Subsidiaries shall create
or assume any Lien upon any of its property or assets, whether
now owned or hereafter acquired, other than Liens excepted by the
provisions of subsection 6.2, unless Agent and Requisite Lenders
shall otherwise consent in writing, it shall make or cause to be
made effective provision whereby the Obligations will be secured
by such Lien equally and ratably with any and all other Indebted-
ness thereby secured as long as any such Indebtedness shall be
secured; provided that notwithstanding the foregoing, this
covenant shall not be construed as a consent by any Lender to any
creation or assumption of any such Lien not permitted by the
provisions of subsection 6.2.
B. Except with respect to specific property
encumbered to secure payment of particular Indebtedness, neither
Holdings nor any of its Subsidiaries shall enter into any agree-
ment prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
5.7 Compliance with Laws, etc.
Holdings and its Subsidiaries shall comply with the
requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including, without limita-
tion, all Environmental Laws), noncompliance with which could
reasonably be expected to result in a Material Adverse Effect.
5.8 Environmental Disclosure and Inspection
(i) Holdings shall, and shall cause each of its
Subsidiaries and their Facilities to comply and shall use
its reasonable efforts to cause (a) their respective
employees, agents, contractors and subcontractors, (b) all
tenants under any lease or occupancy agreement affecting any
portion of the Facilities and (c) all other Persons on or
occupying such property, to comply in all material respects
with all Environmental Laws.
(ii) Holdings and Borrower shall promptly advise
Agent and Lenders in writing and in reasonable detail of (a)
any Release of any Hazardous Material required to be report-
ed to any federal, state or local governmental or regulatory
agency under all applicable Environmental Laws, (b) any and
all written communications with respect to Environmental
Claims or any Release of Hazardous Material required to be
reported to any federal, state or local governmental or
regulatory agency, (c) any remedial action taken by
Holdings, Borrower or, to the extent Holdings or any of its
Subsidiaries has any such knowledge, any other Person in
response to (1) any Hazardous Material on, under or about
any Facility, the existence of which could reasonably be
expected to result in a Material Adverse Effect or (2) any
Environmental Claim that could reasonably be expected to
result in a Material Adverse Effect, (d) Holdings's or any
of its Subsidiaries' discovery of any occurrence or
condition on any real property adjoining or in the vicinity
of any Facility that could cause such Facility or any part
thereof to be classified as "border-zone property" or to be
otherwise subject to any material restrictions on the owner-
ship, occupancy, transferability or use thereof under any
Environmental Laws, and (e) any request for information from
any governmental agency that indicates such agency is
investigating whether Holdings or its Subsidiaries may be
potentially responsible for a Release of Hazardous
Materials.
(iii) Holdings and Borrower shall promptly notify
Agent and Lenders of any proposed acquisition of stock,
assets, or property by Holdings or its Subsidiaries, that
could reasonably be expected to expose Holdings or its
Subsidiaries to, or result in, Environmental Claims that
could reasonably be expected to result in a Material Adverse
Effect and any proposed action to be taken by Holdings or
its Subsidiaries to commence operations that could reason-
ably be expected to subject Holdings or its Subsidiaries to
additional laws, rules or regulations related to Hazardous
Materials or environmental matters covered by Environmental
Laws, including, without limitation, laws, rules and
regulations requiring additional environmental permits or
licenses.
(iv) Holdings and Borrower shall, at their own
expense, provide copies to Agent and Lenders of such
documents or information to which Holdings or any of its
Subsidiaries has access as Agent or Requisite Lenders may
reasonably request in relation to any matters disclosed
pursuant to this subsection 5.8.
5.9 Hazardous Materials; Remedial Action
A. Holdings and Borrower shall, and shall cause its
Subsidiaries, (i) to store, use, dispose and transport any
Hazardous Materials in compliance with all applicable Environ-
mental Laws and (ii) promptly to take any and all necessary
remedial action in response to the Release of any Hazardous
Materials on, under or about any Facility. In the event Holdings
or any of its Subsidiaries undertakes any remedial action with
respect to any Hazardous Material on, under or about any
Facility, Holdings or such Subsidiary shall conduct and complete
such remedial action in compliance with all applicable Environ-
mental Laws, and in accordance with the policies, orders and
directives of all federal, state and local governmental authori-
ties except when Holdings's or such Subsidiary's liability for
such presence,
storage, use, disposal, transportation or discharge of any
Hazardous Material is being contested in good faith by Holdings
or such Subsidiary.
B. Holdings shall not and shall not permit its
Subsidiaries to install or permit to be installed any asbestos in
any property owned or leased by any of them. With respect to any
asbestos currently present in such property, Holdings shall and
shall cause its Subsidiaries to promptly and in accordance with
all applicable Environmental Laws and prudent industry practices,
maintain such asbestos in good and safe condition.
SECTION 6. NEGATIVE COVENANTS
Holdings and Borrower each covenant and agree that, so
long as any of the Commitments shall be in effect or any Letter
of Credit is outstanding and until payment in full of all of the
Loans and all other amounts owing hereunder, unless Requisite
Lenders shall otherwise give prior written consent, such Person
will perform all covenants in this Section 6.
6.1 Indebtedness
Holdings and its Subsidiaries will not, and will not
permit any of their respective Subsidiaries to, directly or
indirectly, create, incur, assume, guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Holdings and Borrower may become and remain
liable with respect to the Obligations;
(ii) each Loan Party may remain liable with
respect to Prepetition Indebtedness, without giving effect
to any supplemental borrowings or other incremental
incurrences thereof;
(iii) Borrower may incur Indebtedness in respect of
(y) Capital Leases not in existence as of the Petition Date,
and (z) Indebtedness not in existence as of the Petition
Date incurred to purchase, or to finance or refinance the
purchase price of, personal or real property (excluding
Inventory) used in the conduct of Borrower's business;
provided that (a) in each case the amount of the Indebted-
ness incurred is not greater than the fair market value plus
the reasonable delivered and installed cost and related
expenses of any property so financed at the time of such
acquisition, (b) the aggregate amount of Capital Leases and
other Indebtedness incurred pursuant to the subsection
6.1(iii) shall not exceed $10,000,000 outstanding at any
time and (c) nothing in this subsection 6.1(iii) shall be
deemed to permit the making of Consolidated Capital
Expenditures in excess of the amounts permitted pursuant to
subsection 6.6B.
(iv) Holdings and its Subsidiaries may become and
remain liable with respect to Contingent Obligations
permitted by subsection 6.4.
6.2 Liens
Holdings will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or
asset (including any document or instrument in respect of goods
or accounts receivable) of Holdings or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or profits
therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens created to secure the Indebtedness
permitted pursuant to subsection 6.1(iii); provided such
Liens relate solely to the property financed with such
Indebtedness;
(iii) Liens existing on the Closing Date which,
other than Permitted Encumbrances, are listed on Schedule
6.2 annexed hereto; and
(iv) Liens approved by the Court on assets (other
than Inventory) of Borrower; provided that there are no
Liens on any such assets to secure Prepetition Indebtedness.
6.3 Investments
Holdings will not, and will not permit any of its
subsidiaries to, directly or indirectly, make or own any
Investment in any Person, except:
(i) Borrower and Holdings may make and own
Investments in Cash Equivalents;
(ii) Borrower may own the existing Investments set
forth on Schedule 6.3 annexed hereto;
(iii) Borrower may make and maintain Investments
received in connection with the bankruptcy or reorganization
of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, suppliers, in each
case arising in the ordinary course of business;
(iv) Borrower may make and maintain Investments in
non-cash proceeds of Asset Sales;
(v) Borrower may make and maintain other
Investments in an aggregate principal amount not to exceed
$500,000 at any time.
6.4 Contingent Obligations
Holdings will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or become or be
liable with respect to any Contingent Obligation except:
(i) Contingent Obligations in respect of the
Obligations;
(ii) guaranties resulting from endorsement of
negotiable instruments for collection in the ordinary course
of business;
(iii) obligations of Holdings under the Guaranty;
(iv) guaranties by Holdings or Borrower in the
ordinary course of business of Capital Leases of Borrower
and its Subsidiaries; provided, such guaranties contain
irrevocable waivers of such guarantor's reimbursement rights
with respect to payments made by such guarantor on behalf of
any other Loan Party;
(v) Contingent Obligations existing prior to the
Petition Date; and
(vi) in addition to the Contingent Obligations
permitted by clauses (i)-(v), Borrower may become and remain
liable with respect to other Contingent Obligations;
provided, that the maximum aggregate liability of Borrower
in respect of all such Contingent Obligations shall not at
any one time exceed $500,000.
6.5 Restricted Junior Payments; Payments on
Pre-Petition Obligations
Holdings and Borrower will not, and will not permit any
of their respective Subsidiaries to, directly or indirectly,
declare, order, pay, make or set apart any sum for (i) any
Restricted Junior Payment, or (ii) any payment or prepayment of
any Pre-Petition Indebtedness or any other claim or obligation
existing on the Petition Date other than (a) payments Borrower
has sought Court approval to make pursuant to a motion filed
prior to September 1, 1995, (b) adequate protection or other
payments to the lenders party to the Prepetition Credit Agreement
arising under any stipulations or orders of the Court or other-
wise on account of obligations under the Prepetition Credit
Agreement, (c) returns of Inventory to the sellers thereof
authorized by the Court pursuant to Bankruptcy Code Section
546(g), (d) payments required under leases, including Capital
Leases, and (e) other payments not in excess of $2,500,000.
6.6 Financial Covenants
A. Minimum Consolidated Adjusted EBITDAV
Holdings and Borrower shall not permit Consolidated
Adjusted EBITDAV as of the last day of each of the Fiscal
Quarters shown below for the applicable Fiscal Quarter ended on
such date to be less than the correlative amount indicated:
Minimum Consolidated
Fiscal Quarter Adjusted EBITDAV
Fiscal Year 1996
Third Fiscal Quarter <$3,000,000>
Fourth Fiscal Quarter 6,300,000
Fiscal Year 1997
First Fiscal Quarter 1,100,000
Second Fiscal Quarter 1,100,000
Third Fiscal Quarter <1,200,000>
Fourth Fiscal Quarter 5,100,000
Fiscal Year 1998
First Fiscal Quarter 1,100,000
Second Fiscal Quarter 1,100,000
B. Maximum Consolidated Capital Expenditures
Holdings and its Subsidiaries shall not permit
Consolidated Capital Expenditures to exceed in any fiscal period
the amount set forth below for such fiscal period (the "Capital
Expenditure Amount"):
Capital
Expenditure
Fiscal Periods Amount
Closing Date through January 31, 1996 $ 5,750,000
February 1, 1996 through January 31, 1997 $11,500,000
February 1, 1997 through September 1, 1997 $ 7,600,000
; provided that if any portion of the Capital Expenditure Amount
permitted to be incurred in any fiscal period (the "Reference
Period") has not been incurred within such Reference Period (the
amount of unutilized Consolidated Capital Expenditures being
referred to as the "Unutilized Amount"), Holdings and its
Subsidiaries may, in the fiscal period immediately following the
Reference Period, make additional Consolidated Capital Expendi-
tures in an amount not to exceed the lesser of (i) the Unutilized
Amount and (ii) twenty-five percent (25%) of the Capital Expen-
diture Amount in respect of the Reference Period.
6.7 Restriction on Fundamental Changes
A. Other than as permitted by subsection 6.7B,
neither Holdings nor any of its Subsidiaries may, without the
consent of Requisite Lenders, acquire or create any Subsidiaries
or convey, sell, lease, sublease or transfer any of its assets to
any Subsidiaries.
B. Neither Holdings, nor any of its Subsidiaries
will enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, exchange, lease, sub-lease,
transfer or otherwise dispose of, in one transaction or a series
of related transactions, all or any substantial part of its
business, property or fixed assets or all or any portion of the
stock or beneficial ownership, whether now owned or hereafter
acquired, or acquire by purchase or otherwise all or substanti-
ally all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person except:
(i) Borrower may sell, exchange or otherwise
dispose of assets in Asset Sale transactions; provided that
any Asset Sale is made for the fair market value of such
assets;
(ii) Borrower may sell, exchange or otherwise
dispose of obsolete or worn out equipment in the ordinary
course of Borrower's business;
(iii) Borrower may sell Inventory in the ordinary
course of its business; and
(iv) a Subsidiary of Borrower acquired pursuant to
subsection 6.7B(i) may be merged or consolidated with or
into Borrower, or be liquidated, wound up or dissolved;
provided, that in the case of such a merger or consolida-
tion, Borrower shall be the continuing or surviving corpora-
tion; provided, further, that as a result of such merger or
consolidation, Borrower shall not become liable with respect
to any liabilities of such Subsidiary which were in exist-
ence prior to the Subsidiary's acquisition by Borrower.
6.8 Sales and Leasebacks
Holdings and its Subsidiaries will not directly or
indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, of any property (whether
real or personal or mixed) whether now owned or hereafter
acquired, (i) that Holdings or its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person, or
(ii) that Holdings or its Subsidiaries intends to use for
substantially the same purpose as any other property that has
been or is to be sold or transferred by Holdings or any such
Subsidiary to any Person in connection with such lease; provided,
however, that Borrower shall be permitted to remain liable as
lessee with respect to, the equipment and fixtures located in its
distribution center located in Carson, California; provided
further that aggregate amount of liabilities incurred in connec-
tion with such lease shall not exceed $4,000,000.
6.9 Sale or Discount of Receivables
Holdings and its Subsidiaries will not, directly or
indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, notes or accounts receivable.
6.10 Transactions with Shareholders and Affiliates
Holdings and its Subsidiaries will not, directly or
indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with
any holder of 5% or more of any class of equity securities of
Holdings or with any Affiliate of Holdings or Borrower or of any
such holder, as the case may be, on terms that are less favorable
to Holdings or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such
a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Borrower and any
of its wholly-owned Subsidiaries or between any of its wholly-
owned Subsidiaries and (ii) customary fees paid to members of the
Boards of Directors of Borrower and its Subsidiaries.
6.11 Disposal of Subsidiary Stock
Except as permitted by subsection 6.7, a Loan Party
will not,
(i) directly or indirectly sell, assign, pledge
or otherwise encumber or dispose of any shares of capital
stock or other equity securities of (or warrants, rights or
options to acquire shares or other equity securities of) any
of its Subsidiaries, except to qualify directors if required
by applicable law; or
(ii) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other securities
of (or warrants, rights or options to acquire shares or
other securities of) such Subsidiary, except to Borrower or
to qualify directors if required by applicable law.
6.12 Conduct of Business; Limitation on
Subsidiaries
Neither Borrower nor any of its Subsidiaries will
engage in any business other than the sale of home entertainment
software, the rental of home entertainment software, the sale of
event tickets, the sale of merchandise and product lines of a
type sold in stores substantially similar to the stores run by
Borrower on the Petition Date and operations substantially
similar or incidental to such business. Holdings shall engage
only in the business of holding the shares of stock of Borrower.
6.13 Chapter 11 Claims.
Without limiting the provisions of subsection 6.2
hereof, neither Holdings nor Borrower shall not incur, create,
assume, suffer or permit any claim against it, as debtor in
possession, or any of the property of the estates in the Chapter
11 Cases (other than the Claims described in the proviso
contained in subsection 2.10 but only to the extent therein
described) to be pari passu with or senior to the claims of
Agents and Lenders against Holdings and Borrower in respect of
the Obligations, or apply to the Court for authority to do so;
provided that Borrower may seek Court approval for and incur
Indebtedness pari passu with the Obligations to refinance the
Obligations if, prior to or concurrently with the incurrence of
such refinancing Indebtedness, (i) all Commitments are termi-
nated, (ii) all Letters of Credit shall have expired or been
terminated and (iii) all Obligations (other than indemnification
Obligations pursuant to Section 10.4 not then due) shall have
been paid in full.
SECTION 7. GUARANTY OF HOLDINGS
7.1 Guaranty by Holdings
As consideration for Lenders agreeing to enter into
this Agreement and extend the Commitments hereunder, Holdings
hereby unconditionally and irrevocably guaranties the due and
punctual payment when due (whether by required prepayment,
declaration, demand or otherwise) of all Obligations of Borrower.
For purposes of this Section 7, Holdings is referred to as a
"Guarantor" and the obligations of Holdings under this subsection
7.1 are referred to as the "Guaranty."
7.2 Terms of Guaranty
Guarantor agrees that the Obligations of the
Borrower may be extended or renewed, and the Loans repaid and
reborrowed in whole or in part, without notice or further assent
from it, and that it will remain bound upon this Guaranty not-
withstanding any extension, renewal or other alteration of any
such Obligation or repayment and reborrowing of the Loans.
Guarantor waives presentation of, demand of,
payment from and protest of any Obligation of Borrower and also
waives notice of protest for nonpayment. The obligations of the
Guarantor under this Guaranty shall not be affected by, and the
Guarantor hereby waives its rights (to the extent permitted by
law) in connection with:
(a) the failure of Agent, or any Lender to assert any
claim or demand or to enforce any right or remedy against
the Borrower under the provisions of this Agreement or any
other agreement or otherwise,
(b) any extension or renewal of any provision thereof,
(c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement or any
instrument executed pursuant hereto,
(d) the release of any of the security, if any, held
by Agent, or any Lender for the Obligations of the Borrower,
(e) the failure of Agent, or any Lender to exercise
any right or remedy against any other guarantor of the
Obligations of Borrower,
(f) Agent or any Lender taking and holding security or
collateral for the payment of this Guaranty, any other
guaranties of the Obligations or other liabilities of
Borrower and the Obligations guarantied hereby, and exchang-
ing, enforcing, waiving and releasing any such security or
collateral,
(g) Agent or any Lender applying any such security or
collateral and directing the order or manner of sale thereof
as Agent in its discretion may determine, or
(h) Agent or any Lender settling, releasing, compro-
mising, collecting or otherwise liquidating the Obligations
and any security or collateral therefor in any manner
determined by Agent or such Lender.
Guarantor further agrees that this Guaranty
constitutes a guaranty of payment when due and not of collection
and waives any right to require that any resort be had by Agent
or any other Person to any of the security held for payment of
the Obligations of Borrower or to any balance of any deposit
account or credit on the books of Agent or any other Person in
favor of Borrower or any other Person.
The obligations of Guarantor under this Guaranty
shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise in
respect of Borrower, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the
Obligations, discharge of Borrower from the Obligations in a
bankruptcy or similar proceeding or otherwise. Without limiting
the generality of the foregoing, the obligations of Guarantor
under this Guaranty shall not be discharged or impaired or other-
wise affected by the failure of Agent or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement or
any other agreement, by any waiver or modification of any provi-
sion thereof, by any default, failure or delay, willful or other-
wise, in the performance of the Obligations of Borrower, or by
any other act or thing or omission or delay to do any other act
or thing that may or might in any manner or to any extent vary
the risk of Guarantor or would otherwise operate as a discharge
of Guarantor as a matter of law or equity.
Agent may, at its election, exercise any right or
remedy Agent may have against Borrower or any of Borrower's
property without affecting or impairing in any way the liability
of the Guarantor hereunder except to the extent the Obligations
have been paid. Guarantor waives any defense arising out of such
election by Agent, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other
right or remedy of Guarantor against Borrower or any security.
Guarantor further agrees that, to the extent that
any Loan Party makes a payment or payments to Agent or any
Lender, or Agent or any Lender receives any proceeds of colla-
teral, if any, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferen-
tial, set aside or otherwise required to be repaid to any Loan
Party, its estate, trustee, receiver or any other party,
including, without limitation, under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date
such initial payment, reduction or satisfaction occurred.
Guarantor shall defend and indemnify Agent and each Lender from
and against any claim or loss hereunder (including reasonable
attorneys' fees and expenses) or in the defense of any action or
suit relating to the foregoing matters.
Guarantor further agrees, in furtherance of the
foregoing and not in limitation of any other right that Agent or
any Lender may have at law or in equity against the Guarantor by
virtue hereof, upon the failure of Borrower to pay any of its
Obligations when and as the same shall become due (whether by
required prepayment, declaration, demand or otherwise), the
Guarantor will forthwith pay, or cause to be paid, in cash, to
Agent an amount equal to the sum of the unpaid principal amount
of such Obligations, accrued and unpaid interest on such Obliga-
tions and all other Obligations of Borrower to Agent or such
Lender.
Guarantor hereby irrevocably waives until (i) all
Commitments have been terminated, (ii) all Letters of Credit have
expired or been terminated and (iii) all Obligations have been
indefeasibly paid in full (other than any indemnification Obliga-
tions not then due and payable), any claim or other rights which
it may now or hereafter acquire against any Loan Party that arise
from the existence, payment, performance or enforcement of such
Guarantor's obligations under this Guaranty or any other Loan
Document, including, without limitation, any right of subroga-
tion, reimbursement, exoneration, contribution, indemnification
or any right to participate in any claim or remedy of any Lender
against any Loan Party or any Collateral which Agent or any
Lender now has or hereafter acquires, whether or not such claim,
remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or
receive from any Loan Party, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or
security on account of such claim or other rights. If any amount
shall be paid to Guarantor in violation of the preceding sentence
and the Obligations shall not have been paid in full in cash,
such amount shall be deemed to have been paid to Guarantor for
the benefit of, and held in trust for the benefit of, Lenders,
and shall forthwith be paid to Agent for the benefit of Lenders
to be applied (in the case of cash) to, or held as collateral (in
the case of non-cash property or securities, or in the case of
any assets to the extent of Obligations in respect of Letters of
Credit to the extent not drawn upon) for the payment or prepay-
ment of the Obligations of Guarantor in accordance with the terms
of this Agreement or the other Loan Documents. Guarantor acknow-
ledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Loan Documents and
that the waiver set forth herein is knowingly made in contempla-
tion of such benefits.
Notwithstanding the provisions of section 362 of
the Bankruptcy Code and any other applicable law and without
application or motion to or order from the Court, in addition to
any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon any failure of
Borrower to pay its Obligations when due (whether by required
prepayment, declaration, demand or otherwise), each Lender, or
Agent with respect to any Obligation owed under the Letters of
Credit and any Affiliate of any of them is hereby authorized by
Guarantor at any time or from time to time, without notice to
Guarantor or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, not limited to,
Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any
other Indebtedness at any time owing by any Lender or any
subsequent holder of any Note or Agent with respect to any
Obligation owed under the Letters of Credit, or any Affiliate of
any of them to or for the credit or the account of Guarantor
against and on account of the obligations and liabilities of
Guarantor to any Lender or Agent with respect to any Obligation
owed under the Letters of Credit, or any Affiliate of any of them
under this Agreement, this Guaranty or the Letters of Credit
including but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, this
Guaranty or the Letters of Credit or any of the other Loan
Documents irrespective of whether or not (a) Lenders or Agent
with respect to any Obligation owed under the Letters of Credit,
or any Affiliate of any of them shall have made any demand
hereunder or (b) Lenders or Agent with respect to any Obligation
owed under the Letters of Credit, or any Affiliate of any of them
shall have declared the principal of and interest on the Loans or
the Letters of Credit and other amounts due hereunder or under
the other Loan Documents to be due and payable as permitted by
Section 8.
SECTION 8. EVENTS OF DEFAULT
IF any of the following conditions or events
("Events of Default") shall occur and be continuing:
8.1 Failure to Make Payments When Due
Failure to pay any installment of principal of any
Loan when due, whether at stated maturity, by declaration or
acceleration, by notice of prepayment, by required prepayment or
otherwise; or failure to pay any interest on any Loan or any
other amount due under this Agreement (including, without limita-
tion, any payment with respect to reimbursement of amounts drawn
under Letters of Credit) within five (5) days after the date due;
or
8.2 Breach of Certain Covenants
Failure of Holdings or Borrower to perform or
comply with any term or condition contained in subsections
2.4A(ii), 2.5, 5.2 or 5.6 or Section 6; or
8.3 Breach of Warranty
Any representation, warranty, certification or
other statement made by any Loan Party in any Loan Document or in
any statement or certificate at any time given by such Loan Party
in writing pursuant hereto or in connection herewith shall be
false in any material respect on the date as of which made; or
8.4 Other Defaults Under Agreement or Loan
Documents
Holdings or Borrower shall default in the perform-
ance of or compliance with any term contained in this Agreement
or the other Loan Documents other than those referred to above in
subsections 8.1, 8.2 or 8.3 and such default shall not have been
remedied or waived within thirty (30) days after receipt by
Holdings or Borrower, as the case may be, of notice from Agent of
any such default; or
8.5 Judgments and Attachments
(i) Any money judgment, writ or warrant of attach-
ment, or similar process involving in any individual case an
amount in excess of $500,000 (exclusive of any amount which is
fully and adequately covered by insurance and with respect to
which the insurer has acknowledged in writing its coverage) that
would constitute an administrative expense in the Chapter 11
Cases shall be entered or filed against Holdings or Borrower or
any of their respective Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of sixty (60) days or in any event later
than five (5) days prior to the date of any proposed sale there-
under; or
(ii) Holdings or any of its Subsidiaries shall
enter into any voluntary settlement of litigation or claim that
would constitute an administrative expense in the Chapter 11
Cases in an amount, in any individual case, in excess of $500,000
(exclusive of any amount which is fully and adequately covered by
insurance and with respect to which the insurer has acknowledged
its coverage in writing); or
8.6 Employee Benefit Plans
There occurs one or more ERISA Events which indivi-
dually or in the aggregate results in or is reasonably expect to
result in liability of Holdings or any of its Subsidiaries in
excess of $1,000,000 during the term of this Agreement; or there
exists an excess of aggregated accumulated benefit obligations,
as defined in Statement of Financial Accounting Standards No. 87
(the "ABO"), over the aggregate total fair market value for all
Pension Plans (excluding for purposes of such computation each
Pension Plan with respect to which the fair market value of the
assets exceeds the ABO and each Pension Plan in which no
employees of Holdings or any of its Subsidiaries have ever
participated as an employee of Holdings or any of its Subsidi-
aries) which exceeds $1,000,000; or
8.7 Change in Control
(i) Persons that collectively beneficially owned
and controlled not less than 51% of the common stock and the
voting power of Holdings on the Petition Date shall cease to own
beneficially and control at least 51% of the common stock and 51%
of the voting power of Holdings entitled to vote for the election
of members of the board of directors of Holdings, or (ii)
Holdings shall cease to own and control at least 100% of the
common stock and 100% of the voting power of Borrower entitled to
vote for the election of members of the board of directors of
Borrower; or
8.8 Material Adverse Effect
Any event or change shall occur (other than any
event described on Schedule 4.4 hereof) that has caused or
evidences, either in any case or in the aggregate, a Material
Adverse Effect; or
8.9 Bankruptcy Proceeding Events
(i) The entry of an order authorizing Borrower or
Holdings in either Chapter 11 Case to obtain additional financing
(other than any additional Indebtedness expressly permitted under
this Agreement) under Section 364(c) or (d) of the Bankruptcy
Code; (ii) the appointment or election of an interim or permanent
trustee in either of the Chapter 11 Cases or the appointment of
an examiner in either of the Chapter 11 Cases with expanded
powers to operate or manage the financial affairs, the business,
or reorganization of any Loan Party; (iii) the dismissal of
either of the Chapter 11 Cases, or the conversion of either of
the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy
Code; (iv) the entry of an order granting relief from or
modifying the automatic stay of Section 362 of the Bankruptcy
Code (a) to allow any creditor to execute upon or enforce a Lien
on any material property or assets of Borrower or (b) with
respect to any Lien of, or the granting of any Lien on any
material property or assets of any Loan Party to, any State or
local environmental or regulatory agency or authority; (v) the
entry of an order amending, supplementing, staying, vacating or
otherwise modifying any of the Borrowing Orders or this Agreement
or any other Loan Document or any of Agent's or Lenders' rights,
benefits, privileges or remedies under the Borrowing Order, this
Agreement or any other Loan Document, in any case without
Requisite Lenders' prior consent; (vi) an order shall be entered
approving, or there shall arise, any other administrative expense
claim (other than those specifically referred to in subsection
2.10) having any priority over, or being pari passu with, the
administrative expenses priority of the Obligations in respect of
the Chapter 11 Cases; (vii) any Loan Party shall file an
application for the approval
of additional financing under Section 364(c) or (d) of the
Bankruptcy Code or any other administrative expense claim (other
than those specifically referred to in the proviso in subsection
2.10 and Indebtedness to refinance the Obligations specifically
referred to in the proviso in subsection 6.13) having any priori-
ty over, or being pari passu with the administrative expense
priority of the Obligations in respect of the Chapter 11 Cases.
THEN upon the occurrence and during the continuance of any Event
of Default, Requisite Lenders may (notwithstanding the provisions
of Section 362 of the Bankruptcy Code and without application or
motion to, or order from, the Court), by written notice to
Borrower (i) declare all or any portion of (a) the unpaid
principal amount of and accrued interest on the Loans, (b) an
amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any
beneficiary under any Letter of Credit shall have presented or be
entitled to present, the drafts and other documents required to
draw under the Letter of Credit), and (c) all other Obligations
to be, and the same shall forthwith become, immediately due and
payable, without presentment, demand, protest or other require-
ments of any kind, all of which are hereby expressly waived by
Holdings and Borrower, and the obligation of each Lender to make
any Loan, and the obligation of each Issuing Lender to issue any
Letter of Credit shall thereupon terminate; provided, that the
foregoing shall not affect in any way the obligations of Lenders
to make Loans to reimburse drawings under Letters of Credit as
provided in subsection 2.8C and (ii) demand the immediate payment
in full of all or any portion of the Obligations; provided that
the Agent shall give the Borrower, the Creditors' Committee and
the lenders party to the Prepetition Credit Agreement thirty
days' prior written notice (the "Payment Notice") of any exercise
or enforcement of the right to immediate payment (including any
set off pursuant to Section 7.2 or any enforcement pursuant to
Section 10.5) and file a copy of the Payment Notice with the
Court; provided further that to the extent the Loan Parties do
not have cash available to pay the full amount owing as stated in
the Payment Notice, the Loan Parties shall liquidate Inventory
and any unencumbered assets such that the proceeds will be
sufficient to satisfy the full amount stated in the Payment
Notice as promptly as reasonably possible. If such liquidations
are insufficient to pay the Agent and Lenders in full, Holdings
and Borrower shall immediately seek leave to dispose of their
interests in any other assets, subject to the rights and
interests of creditors with Liens on such assets. So long as any
Letter of Credit shall remain outstanding, any amounts described
in clause (i)(b) above with respect to Letters of Credit, when
received by the Issuing Lender, shall be held by the Issuing
Lender, pursuant to such documentation as the Issuing Lender
shall request, as cash collateral for the obligation of Borrower
to reimburse the Issuing Lender in the event of any drawing under
such Letters of Credit, and so much of such funds shall at all
times remain on deposit as cash collateral as aforesaid as shall
equal the maximum amount available at any time for drawing under
all Letters of Credit (the "Maximum Available Amount"); provided
that in the event of cancellation or expiration of any Letter of
Credit or any reduction in the Maximum Available Amount, the
Issuing Lender shall apply the difference between the cash
collateral held by the Issuing Lender immediately prior to such
cancellation, expiration or reduction and the Maximum Available
Amount immediately after such cancellation, expiration or reduc-
tion first to the payment of any outstanding Obligations, and
second to the payment to whomsoever shall be lawfully entitled to
receive such funds.
Neither Agent nor Lenders shall have any obligation
of any kind to make a motion or application to the Bankruptcy
Court to exercise their rights and remedies set forth or referred
to in this Agreement or in the other Loan Documents. The enume-
ration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of
which shall be cumulative and not alternative.
Except as expressly provided herein with respect to
the Payment Notice, each of Holdings and Borrower waive (i)
presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper
and guaranties or other property at any time held by Agent, or
Lenders on which Holdings or Borrower may in any way be liable
and hereby ratify and confirm whatever Agent or Lenders may do in
this regard, (ii) any bond or security which might be required by
any court prior to allowing Agent or Lenders to exercise any of
their remedies, and (iii) the benefit of all valuation, appraisal
and exemption laws. Each of Holdings and Borrower acknowledge
they have been advised by counsel of their choice with respect to
the effect of the foregoing waivers and this Agreement, the other
Loan Documents and the transactions evidenced by this Agreement
and the other Loan Documents.
SECTION 9. AGENT
9.1 Appointment
Bankers is hereby appointed Agent hereunder by each
Lender. Each Lender hereby authorizes Agent to act hereunder and
under the other instruments and agreements referred to herein as
its agent hereunder and thereunder. Agent agrees to act as such
upon the express conditions contained in this Section 9. The
provisions of this Section 9 are solely for the benefit of Agent
and Lenders, and neither Holdings nor any of its Subsidiaries
shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing their functions and duties
under this Agreement, Agent shall act solely as agent of Lenders
and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for
Holdings or any of its Subsidiaries.
9.2 Powers; General Immunity
A. Duties Specified. Each Lender irrevocably
authorizes Agent to take such action on such Lender's behalf and
to exercise such powers hereunder and under the other instruments
and agreements referred to herein as are specifically delegated
to Agent, by the terms hereof, together with such powers as are
reasonably incidental thereto. Agent shall have only those
duties and responsibilities that are expressly specified in this
Agreement and it may perform such duties by or through its agents
or employees. The duties of Agent shall be mechanical and
administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to impose upon Agent any obligations
in respect of this Agreement or the other instruments and agree-
ments referred to herein except as expressly set forth herein or
therein.
B. No Responsibility for Certain Matters. Agent
shall not be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability, collecti-
bility or sufficiency of this Agreement, any other Loan Document
or the Notes or Letters of Credit, or for any representations,
warranties, recitals or statements made herein or therein or made
in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made
by Agent to Lenders or by or on behalf of Holdings or any of its
Subsidiaries to Agent or any Lender or be required to ascertain
or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained
herein or therein or as to the use of the proceeds of the Loans
or of the existence or possible existence of any Event of Default
or Potential Event of Default. Anything contained in this
Agreement to the contrary notwithstanding, Agent shall not have
any liability arising from confirmations of the amount of
outstanding loans.
C. Exculpatory Provisions. Neither Agent not any
of its officers, directors, employees or agents shall be liable
to Lenders for any action taken or omitted hereunder or in
connection herewith unless caused by its or their gross negli-
gence or willful misconduct. If Agent shall request instructions
from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement,
Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions
from Requisite Lenders or, to the extent such action requires the
consent of all Lenders pursuant to the express terms of this
Agreement, all Lenders. Without prejudice to the generality of
the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions
and judgments of attorneys (who may be attorneys for Holdings or
any of its Subsidiaries), accountants, experts and other profes-
sional advisors selected by it; and (ii) no Lender shall have any
right of action whatsoever against Agent as a result of Agent
acting or (where so instructed) refraining from acting under this
Agreement or the other instruments and agreements referred to
herein in accordance with the instructions of Requisite Lenders.
Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in them under this Agreement or
the other instruments and agreements referred to herein unless
and until they have obtained the instructions of Requisite
Lenders.
D. Agent Entitled to Act as Lender. The agency
hereby created shall in no way impair or affect any of the rights
and powers of, or impose any duties or obligations upon, Agent in
its individual capacity as a Lender hereunder. With respect to
its participation in the Loans, Agent shall each have the same
rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and
functions delegated to it hereunder and the term "Lender" or any
similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity. Agent and
its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial
advisory or other business with Holdings or any Affiliate of
Holdings as if it were not performing the duties specified
herein, and may accept fees and other consideration from Holdings
or any of its Subsidiaries for services in connection with this
Agreement and otherwise without having to account for the same to
Lenders, except as required by subsection 2.3.
9.3 Representations and Warranties; No
Responsibility For Appraisal of
Creditworthiness
Each Lender represents and warrants that it has
made its own independent investigation of the financial condition
and affairs of Holdings and its Subsidiaries in connection with
the making of the Loans hereunder and has made and shall continue
to make its own appraisal of the creditworthiness of Holdings and
its Subsidiaries. Agent shall not have any duty or responsibili-
ty either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with
respect thereto whether coming into their possession before the
making of the Loans or any time or times thereafter and Agent
shall not have any responsibility with respect to the accuracy of
or the completeness of the information provided to Lenders.
9.4 Right to Indemnity
Each Lender, proportionately to its Pro Rata Share,
severally agrees to indemnify Agent to the extent Agent shall not
have been reimbursed by Holdings or its Subsidiaries, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disburse-
ments of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties
hereunder, in any way relating to or arising out of this Agree-
ment; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct.
If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is
furnished.
9.5 Registered Persons Treated as Owner
Agent may deem and treat the Persons listed as
Lenders in the Register as the owner of the corresponding Loan
listed therein for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been
filed with Agent and recorded in the Register. Any request,
authority or consent of any person or entity who, at the time of
making such request or giving such authority or consent, is
listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, transferee or assignee of the
corresponding Loan.
9.6 Successor Agents
Agent may resign at any time by giving written
notice thereof to Lenders and Borrower, and Agent may be removed
at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Borrower and Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any
such removal of Agent, Requisite Lenders shall have the right,
upon five (5) days notice to Borrower, to appoint a successor
Agent from among the Lenders. If no successor Agent shall have
been so appointed by Requisite Lenders, and shall have accepted
such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or Requisite Lenders'
removal of the retiring Agent then, upon five days' notice to
Borrower, the retiring Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, or a commercial bank
organized under the laws of the United States of America or of
any State thereof, or any Affiliate of such bank, having a
combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as an Agent hereunder by a succes-
sor Agent, that successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties
of the retiring or removed Agent and the retiring or removed
Agent shall be discharged from its duties and obligations as
Agent, under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, as the case
may be, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
SECTION 10. MISCELLANEOUS
10.1 Representation of Lenders
Each Lender hereby represents that it is a commer-
cial lender or financial institution which makes loans in the
ordinary course of its business and that it will make any Loan
for its own account in the ordinary course of such business and
that, subject to subsection 10.2, the disposition of evidence of
Indebtedness held by that Lender shall at all times be within its
exclusive control.
10.2 Assignments and Participations in Loans;
Letters of Credit
Notwithstanding the provisions of subsection 10.1,
each Lender may assign its rights and delegate its obligations
under this Agreement and further may assign, or sell participa-
tions in, all or any part of any Loan or Loans made by it or its
Commitment or any other interest herein or in its participation
in the Letters of Credit to another bank or other entity;
provided that (i) no participation or assignment shall, without
the consent of Borrower, require Borrower to file a registration
statement with the Securities and Exchange Commission or apply to
qualify the Loans under the blue sky law of any state; (ii) in
the case of an assignment such assignment shall (a) be assigned
to an Affiliate of such Lender or another Lender with the giving
of notice to Borrower and Agent, or be assigned to a bank,
financial institution or other "accredited investor" (as defined
in the Securities Act of 1933, as amended) approved by Agent,
which approval shall not be unreasonably withheld, (b) be
assigned pursuant to an assignment agreement substantially in the
form of Exhibit VI annexed hereto and (c) be in a minimum amount
of $3,000,000 if to a Person other than a Lender; provided, that
if the aggregate amount of such Lender's Commitment is less than
$3,000,000, the assignment may be in such lesser amount; and
(iii) in the case of a participation, the holder of any such
participation, other than an Affiliate of such Lender, shall not
be entitled to require such Lender to take or omit to take any
action hereunder except the extension of the final scheduled
maturity of the amount of a Loan or Commitment or a reduction of
the principal amount of or the decrease in the rate of interest
payable on the Loans or any fees related thereto. An assignment
pursuant to this subsection 10.2 shall become effective upon the
(x) satisfaction of the conditions set forth herein and in the
applicable assignment agreement and (y) receipt by Agent of a
processing and recordation fee of $3,500. In the case of an
assignment authorized under this subsection 10.2, the assignee
shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were a Lender here-
under, including, without limitation, the right to approve or
disapprove actions which, in accordance with the terms hereof,
require the approval of the Requisite Lenders, the obligation to
fund loans directly to Agent pursuant to subsection 2.1B and the
assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitments to the extent assigned. Borrower
hereby acknowledges and agrees that the assignee shall for all
purposes hereunder be considered to be a "Lender." In the event
of an assignment hereunder the Commitments hereunder shall be
modified to reflect the Commitment of such assignee and, in the
event of an assignment of a Note or Notes, upon surrender of the
assigning Lender's Note(s), Borrower shall issue and deliver to
Agent, for delivery to the assignee (and, if applicable, the
assigning Lender) a new Note or Notes showing the assignee as the
registered owner of the transferred Note(s) and, if any such
assignment occurs while any Loan is outstanding, Agent shall, no
later than five (5) Business Days following receipt of notice
thereof, record such assignment in the Register as provided in
subsection 2.2G. Every Note presented or surrendered for trans-
fer to an assignee shall (if so required by Agent or Borrower) be
duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to Agent and Borrower, duly
executed by the holder thereof or its duly authorized attorney.
Each Lender may furnish any information concerning Holdings or
any of its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective
assignees and participants). Borrower hereby acknowledges and
agrees that any participation will give rise to a direct obliga-
tion of Borrower to the participant and the participant shall for
purposes of subsections 2.6, 2.7, 2.8, 10.5 and 10.6 be consi-
dered to be a "Lender".
10.3 Expenses
Whether or not the transactions contemplated hereby
shall be consummated, Holdings and its Subsidiaries jointly and
severally agree to promptly pay and hereby authorize the Agent to
debit the Borrower's account for (i) all the actual and reasona-
ble costs and expenses of Agent for the preparation of the Loan
Documents and all the costs of furnishing all opinions by counsel
for Holdings and its Subsidiaries (including, without limitation,
any opinions reasonably requested by Agent as to any legal
matters arising hereunder), and of Holdings's and its Subsidia-
▇▇▇▇' performance of and compliance with all agreements and
conditions contained herein on its part to be performed or
complied with, (ii) the reasonable fees, expenses and disburse-
ments of counsel to Agent (including allocated costs of internal
counsel) in connection with the negotiation, syndication,
preparation, execution and administration of this Agreement, the
Loan Documents, the Loans and Letters of Credit hereunder, and
any amendments and waivers hereto, (iii) all other actual and
reasonable out-of-pocket expenses incurred by Agent in connection
with the negotiation, preparation, execution and administration
of this Agreement and the Loan Documents, the making of the Loans
hereunder and the issuance of the Letters of Credit and other
extensions of credit hereunder and the syndication of such Loans
and Letters of Credit, including without limitation all
appraisals, inventory and other collateral and systems audits,
environmental reports, and solvency reports, and (iv) after the
occurrence of a Potential Event of Default or an Event of
Default, all costs and expenses incurred by Agent and Lenders in
enforcing any Obligations of or in collecting any payments due
from Holdings or any of its Subsidiaries hereunder or the Letters
of Credit or of any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceeding
(including reasonable fees of legal counsel to Agent (but
excluding fees of separate legal counsel to Lenders), including
allocated costs of internal counsel and costs of settlement) and
(v) all the actual and reasonable expenses of Agent related to
this Agreement, the Loan Documents, the Loans and Letters of
Credit hereunder in connection with the Chapter 11 Cases
(including without limitation the on-going monitoring by Agent of
the Chapter 11 Cases, including attendance by Agent and its
counsel at hearings or other proceedings and the on-going review
of documents filed with the Court in respect thereof); provided
that, except for periods when an Event of Default or Potential
Event of Default has occurred and is continuing, the aggregate
amount payable pursuant to clause (v) of this Section 10.3 or
otherwise payable in respect of Agent's monitoring of the
Inventory and administration of the Loans after the entry of the
Final Borrowing Order shall not exceed $5,000 a month (excluding
all amounts payable in connection with (a) any amendments,
waivers, consents or other modifications of or otherwise in
respect of the Loan Documents requested by Holdings or Borrower
or (b) any appeal or modification of the Final Borrowing Order),
measured as of any date of determination on a cumulative basis
for the period commencing on the Closing Date and ending on such
date of determination.
10.4 Indemnity
In addition to the payment of expenses pursuant to
subsection 10.3, whether or not the transactions contemplated
hereby shall be consummated, Holdings and its Subsidiaries
jointly and severally agree to indemnify, pay and hold Agent and
Lenders, and the officers, directors, employees, agents, and
affiliates of Agent and Lenders and such holders (collectively
called the "Indemnitees") harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disburse-
ments of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for
such Indemnitees) in connection with any investigative, admini-
strative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated a party thereto, that
may be imposed on, incurred by, or asserted against that Indemni-
tee, in any manner relating to or arising out of (to the extent
relating to or arising out of) this Agreement or the other Loan
Documents, commitment letter, Lenders' agreement to make the
Loans and other extensions of credit and Lenders' agreements to
purchase participations therein as provided herein, the use or
intended use of the proceeds of any of the Loans or other exten-
sions of credit hereunder, including without limitation, any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses or disbursements of any
kind or nature under or in connection with the Chapter 11 Cases
related to this Agreement, the other Loan Documents or the exten-
sions of credit hereunder or thereunder (the "Indemnified Liabi-
lities"); provided that neither Holdings nor any of its Subsidia-
▇▇▇▇ shall have any obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities arising from (i) the gross
negligence or willful misconduct of such Indemnitee, all as
determined by a final judgment of a court of competent jurisdic-
tion or (ii) the Prepetition Credit Agreement. To the extent
that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, Holdings and its
Subsidiaries shall each contribute the maximum portion that it is
permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
10.5 Set Off
Notwithstanding the provisions of section 362 of
the Bankruptcy Code and any other applicable law and without
application or motion to or order from the Court, in addition to
any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence of
any Event of Default, each Lender, upon the consent of Agent and
Requisite Lenders, is hereby authorized by Holdings and any of
its Subsidiaries at any time or from time to time, without notice
to Holdings or any of its Subsidiaries, or to any other Person,
any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or
special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not
including trust accounts) and any other Indebtedness at any time
held or owing by that Lender to or for the credit or the account
of Holdings or any of its Subsidiaries, against and on account of
the obligations and liabilities of Holdings or any of its Subsi-
diaries to that Lender under this Agreement or with respect to
the Letters of Credit, including, but not limited to, all claims
of any nature or description arising out of or connected with
this Agreement or with respect to the Letters of Credit or any
other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans, Notes or any Obligations with
respect to the Letters of Credit, and other amounts due hereunder
shall have become due and payable pursuant to Section 8 and
although said obligations and liabilities, or any of them, may be
contingent or unmatured.
10.6 Ratable Sharing
Lenders each agree among themselves that if any of
them shall, through the exercise of any right of counterclaim,
set-off, banker's lien or otherwise or as adequate protection of
a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate
amount of principal and interest then due with respect to the
Loans and the amounts payable in respect of the Letters of Credit
held by that Lender, or amounts due to that Lender in respect of
facility fees or commitment fees hereunder (collectively, the
"Aggregate Amounts Due" to such Lender), which is greater than
the proportion received by any other Lender in respect to the
Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify
each other Lender and Agent of such receipt and (ii) purchase
participations (which it shall be deemed to have done simultane-
ously upon the receipt of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by the Lenders in proportion to the
Aggregate Amounts Due them; provided that if all or part of such
proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender, those purchases
shall be rescinded and the purchase prices paid for such partici-
pations shall be returned to that Lender to the extent of such
recovery, but without interest. Holdings and each of its
Subsidiaries expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may
exercise any and all rights of banker's lien, set-off or counter-
claim with respect to any and all monies owing by Holdings or any
of its Subsidiaries to that holder.
10.7 Amendments and Waivers
No amendment, modification, termination or waiver
of any provision of this Agreement or consent to any departure by
Holdings or Borrower therefrom, shall in any event be effective
without the written occurrence of Requisite Lenders; except that
any amendment, modification, termination, or waiver of any
provision increasing the principal amount of the Commitments or
the Loans, each Lender's Pro Rata Share (except in accordance
with subsection 10.2), the definition of "Requisite Lenders", any
provision expressly requiring the approval or concurrence of all
Lenders, the extension of the final scheduled maturity dates of
the Loans, a decrease of interest rates borne by the Loans, a
decrease in any amounts payable in respect of the Letters of
Credit which constitutes a forgiveness of indebtedness, including
a decrease of the rate of fees payable thereon, a decrease of the
amount of fees payable to Lenders hereunder, a reduction in any
amounts payable with respect to the principal amount of the Loans
which constitutes a forgiveness of indebtedness, the obligation
of Lenders to fund Loans to reimburse the Issuing Lender under
any Letter of Credit, the obligation of Lenders to purchase
participations with respect to Letters of Credit and the
provisions contained in subsections 8.1 and 10.7 shall be
effective only if evidenced by a writing signed by or on behalf
of all Lenders. No amendment, modification, termination or
waiver of any provision of Section 9 which relates to Agent shall
be effective without the written concurrence of Agent. Agent
may, but shall have no obligation to, with the concurrence of any
Lender, execute amendments, modifications, waivers or consents on
behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on any Loan Party in
any case shall entitle such Person to any other or further notice
or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accord-
ance with this subsection 10.7, shall be binding upon each Lender
and each future Lender (regardless of whether such Lender's Notes
shall be marked to indicate such amendment, modification, waiver
or consent).
10.8 Independence of Covenants
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limita-
tions of, another covenant shall not avoid the occurrence of an
Event of Default or Potential Event of Default if such action is
taken or condition exists.
10.9 Notices
Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, tele-
copied or sent by United States mail or courier service and shall
be deemed to have been given when delivered in person, receipt of
telecopy or four Business Days after depositing it in the United
States mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to Agent shall not be
effective until received. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is
delivered as provided in this subsection 10.9) shall be as set
forth under each party's name on the signature pages hereof.
10.10 Survival of Warranties and Certain
Agreements
A. All agreements, representations and warranties
made herein shall survive the execution and delivery of this
Agreement, and the making of the Loans hereunder.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Borrower set
forth in subsections 2.6E, 2.6H, 2.7, 2.8E, 2.8G, 2.8H, 10.3,
10.4 and 10.5 and the agreements of Lenders set forth in subsec-
tions 9.2C, 9.4, 10.5 and 10.6 shall survive the payment of
the Loans and the reimbursement obligations under the Letters of
Credit and the termination of this Agreement.
10.11 Failure or Indulgence Not Waiver;
Remedies Cumulative
No failure or delay on the part of any Lender or
any holder of any Note in the exercise of any power, right or
privilege hereunder or under the Notes shall impair such power,
right or privilege or be construed to be a waiver of any default
or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement or the Notes
are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.12 Obligations Several; Independent Nature of
Lenders' Rights
The obligation of each Lender hereunder is several,
and no Lender shall be responsible for the obligation or commit-
ment of any other Lender hereunder. Nothing contained in this
Agreement and no action taken by Lenders pursuant hereto shall be
deemed to constitute Lenders to be a partnership, an association,
a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and it shall
not be necessary for any other Lender to be joined as an addi-
tional party in any proceeding for such purpose.
10.13 Headings; Table of Contents
Section and subsection headings in this Agreement
and the table of contents are included herein for convenience of
reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.14 Applicable Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.
10.15 Successors and Assigns; Subsequent
Holders of Notes
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors and
assigns of Lenders. The terms and provisions of this Agreement
shall inure to the benefit of any assignee of the Loans, and in
the event of such transfer or assignment, the rights and privi-
leges herein conferred upon Lenders shall automatically extend to
and be vested in such transferee or assignee, all subject to the
terms and conditions hereof. Neither Holdings's or any of its
Subsidiaries' rights nor any interest therein hereunder may be
assigned without the written consent of all Lenders. Lenders'
rights of assignment are subject to subsection 10.2.
10.16 Consent to Jurisdiction and Service
of Process
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS
OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OBLIGATION SHALL BE SUBJECT TO THE JURISDICTION OF THE COURT AND,
IF THE COURT DOES NOT HAVE (OR ABSTAINS FROM) JURISDICTION, MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDIC-
TION SITTING IN NEW YORK, NEW YORK AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT HOLDINGS AND BORROWER ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES
ANY DEFENSE OF FORUM NON CONVENIENT, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT OR SUCH OBLIGATION. Holdings and Borrower each hereby
agree that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return
receipt requested, to Holdings or Borrower at its address
provided in subsection 10.9, such service hereby being acknow-
ledged by Holdings and Borrower to be sufficient for personal
jurisdiction in any action against it in any such court and to be
otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Agent
or any Lender to bring proceedings against Holdings and Borrower
in the courts of any other jurisdiction.
10.17 Waiver of Jury Trial
HOLDINGS, BORROWER, AGENT AND EACH LENDER HEREBY
MUTUALLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate
to the subject matter of this transaction, including without
limitation, contract claims, tort claims, breach of duty claims,
and all other common law and statutory claims. Borrower, Agent
and each Lender each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has
already relied on the waiver in entering into this Agreement, and
that each will continue to rely on the waiver in their related
future dealings. Holdings, Borrower, Agent and each Lender
further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICA-
TIONS TO THIS AGREEMENT, THE LOAN DOCUMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR THE LETTERS OF
CREDIT. In the event of litigation, this Agreement may be filed
as a written consent to a trial by the court.
10.18 Parties Including Trustees; Court
Proceedings.
This Agreement and the claims of the Agent and
Lenders hereunder or under any other Loan Document shall at all
times be binding upon Borrower and Holdings, the estate of
Borrower and Holdings and any trustee appointed in the Chapter 11
Cases or any Chapter 7 case, or any other successor in interest
to Borrower or Holdings notwithstanding the discharge of Borrower
or Holdings pursuant to section 1141 of the Bankruptcy Code, the
conversion of either of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code or the dismissal of either of
the Chapter 11 Cases. This Agreement shall not be subject to
Section 365 of the Bankruptcy Code.
10.19 Counterparts; Effectiveness
This Agreement and any amendments, waivers,
consents, or supplements may be executed in any number of
counterparts and by different parties hereto in separate counter-
parts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall
constitute but one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt of written or telephonic
notification of such execution and authorization of delivery
thereof by Holdings, Borrower, and Agent.
10.20 Absence of Prejudice to Lenders or to
Holders of Debt Under the Prepetition
Credit Agreement with Respect to Matters
Before the Bankruptcy Court.
Holdings and Borrower acknowledge that the Bank-
ruptcy Code and Bankruptcy Rules require them to seek Court
authorization for certain matters that may also be addressed in
this Agreement. Neither Holdings nor Borrower will mention in
any pleadings or argument before the Court in support of, or in
any way relating to, a position that Court authorization should
be granted that a position or request for Court authorization is
permitted by this Agreement (unless a Person opposing any such
pleading or argument asserts that such position or request is
not, or questions whether such position or request is, permitted
by this Agreement) or in any way attempt to support a position
before the Court based on the provisions of this Agreement.
Agent, Lenders and the agent and lenders under the Prepetition
Credit Agreement shall be free to bring, oppose or support any
matter before the Court no matter how treated in this Agreement.
The fact that Agent is also the agent and a lender under the
Prepetition Credit Agreement shall in no way prejudice the rights
of agent or any lender under the Prepetition Credit Agreement.
[Remainder of page intentionally left blank.]
WITNESS the due execution hereof by the respective
duly authorized officers of the undersigned as of the date first
written above.
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-possession
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Notice Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
WEI HOLDINGS, INC.
as debtor and debtor-in-possession
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Notice Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
S-1
BANKERS TRUST COMPANY,
individually and as Agent
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Title: Managing Director
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy of all financial
reports to:
Bankers Trust Company
Mail Stop 2144
Agency Services Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
S-2
EXHIBIT I
FORM OF NOTICE OF BORROWING
Pursuant to that certain Debtor-in-Possession Credit
Agreement dated as of September 25, 1995 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings
assigned those terms in the Credit Agreement) by and among WEI
Holdings, Inc., a Delaware corporation, as debtor and debtor-in-
possession ("Holdings"), Wherehouse Entertainment, Inc., a
Delaware corporation, as debtor and debtor-in-possession
("Borrower"), the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders ("Agent"), this represents
Borrower's request to borrow on ___________, 19__ $__________
from Lenders on a pro rata basis as [Base Rate/Eurodollar Rate]
Loans. [The Interest Period for such Eurodollar Rate Loans is
requested to be a [one/two/three/six] month period]. The
proceeds of such Loans are to be deposited in Borrower's account
at the office of Agent located at One Bankers Trust Plaza, New
York, New York.
The undersigned officer, to the best of such officer's
knowledge, and Borrower certify that (i) the representations and
warranties of Borrower and Holdings contained in the Credit
Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the Funding Date
to the same extent as though made on and as of the Funding Date,
except to the extent such representations and warranties specifi-
cally relate to an earlier date, in which case such representa-
tions and warranties were true, correct and complete in all
material respects on and as of such earlier date; (ii) no Event
of Default or Potential Event of Default has occurred and is
continuing or will result from the proposed borrowing; (iii)
Borrower and Holdings have performed in all material respects all
agreements and satisfied all conditions under the Credit Agree-
ment required to be performed by either or both of them on or
before the Funding Date; (iv) after giving effect to the proposed
borrowing, the aggregate outstanding amount of the Obligations
will not exceed the amount authorized by the Interim Borrowing
Order or the Final Borrowing Order, as the case may be, and the
Interim Borrowing Order or the Final Borrowing Order, as the case
may be, shall be in full force and effect and shall not be
stayed; and (v) each of the other conditions to funding set forth
in subsection 3.2B of the Credit Agreement will be satisfied on
the proposed Funding Date.
DATED: _______________
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-possession
By ____________________________
Title:
EXHIBIT II
FORM OF NOTICE OF ISSUANCE OF
LETTER OF CREDIT
Pursuant to that certain Debtor-in-Possession Credit
Agreement dated as of September 25, 1995 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings
assigned those terms in the Credit Agreement), by and among WEI
Holdings, Inc., a Delaware corporation, as debtor and debtor-in-
possession ("Holdings"), Wherehouse Entertainment, Inc., a
Delaware corporation, as debtor and debtor-in-possession
("Borrower"), the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders ("Agent"), this represents
Borrower's request to have [1] issue a Letter of Credit for the
account of Borrower on [2] in the face amount of $[3] with an
expiration date of [4] for the benefit of [5]. [6]
The undersigned officer, to the best of such officer's
knowledge, and Borrower certify that (i) the representations and
warranties contained in the Credit Agreement and the other Loan
Documents are true, correct and complete in all material respects
on and as of the date hereof to the same extent as though made on
and as of the date hereof, except to the extent such representa-
tions and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of
such earlier date; (ii) no Event of Default or Potential Event of
Default has occurred and is continuing under the Credit Agreement
or will result from the proposed issuance of the Letter of Credit
for the account of Borrower; (iii) Borrower and Holdings have
performed in all material respects all agreements and satisfied
all conditions under the Credit Agreement required to be per-
formed by either or both of them on or before the date hereof;
(iv) after giving effect to the proposed issuance, the aggregate
outstanding amount of the Obligations will not exceed the amount
________________________
[1] Insert name of Issuing Lender.
[2] Insert proposed date of issuance of the Letter of Credit.
[3] Insert face amount of the Letter of Credit in numbers.
[4] Insert expiration date for the Letter of Credit.
[5] Insert name and address of the beneficiary of the Letter of
Credit.
[6] Insert precise description of the documents and the verbatim
text of the certificate to be presented by the beneficiary
which, if presented prior to the expiration date of the
Letter of Credit, would require the Issuing Lender to make
payment under the Letter of Credit.
authorized by the Interim Borrowing Order or the Final Borrowing
Order, as the case may be, and the Interim Borrowing Order or the
Final Borrowing Order, as the case may be, shall be in full force
and effect and shall not be stayed; (v) after giving effect to
the proposed issuance, the Letter of Credit Usage will not exceed
$10,000,000; and (vi) each of the other conditions to the
issuance of a Letter of Credit set forth in subsection 3.3 of the
Credit Agreement will be satisfied on the proposed Funding Date.
DATED: _____________________
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-
possession
By _________________________
Title:
EXHIBIT III
FORM OF NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Debtor-in-Possession Credit
Agreement dated as of September 25, 1995 (such agreement as it
may be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings
assigned to those terms in the Credit Agreement) by and among WEI
Holdings, Inc., a Delaware corporation, as debtor and debtor-in-
possession ("Holdings"), Wherehouse Entertainment, Inc., a
Delaware corporation, as debtor and debtor-in-possession
("Borrower"), the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders, this represents Borrower's
request to [A: convert $___________ in principal amount of
presently outstanding [Base Rate/Eurodollar Rate] Loans [with an
Interest Period expiration date of _________, 19__] to [Base
Rate/Eurodollar Rate] Loans on ___________, 19__.] [The Interest
Period for such Eurodollar Rate Loans is requested to be a
[one/two/three/six] month period.] [B: continue as Eurodollar
Rate Loans $___________ in principal amount of presently
outstanding Loans with an Interest Period expiration date of
___________, 19__.] [The Interest Period for such Eurodollar Rate
Loans commencing on such Interest Period expiration date is
requested to be a [one/two/three/six] month period.] Borrower
certifies that no Event of Default or Potential Event of Default
has occurred and is continuing or will result from the proposed
[conversion/continuation].
DATED: _______________
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-possession
By __________________________
Title:
EXHIBIT IV
FORM OF NOTE
WHEREHOUSE ENTERTAINMENT, INC.
$[1] ____________, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, WHEREHOUSE ENTERTAINMENT, INC., a
Delaware corporation, as debtor and debtor-in-possession
("Borrower"), promises to pay to the order of [2]("Payee"), on or
before the Expiry Date, the lesser of (x) [3]($[1]) and (y) the
unpaid aggregate principal amount of all advances made by Payee
to Borrower as Loans under the Credit Agreement referred to
below.
Borrower also promises to pay interest on the unpaid
principal amount hereof until paid at the rates, at the times and
from the dates which shall be determined in accordance with the
provisions of that certain Debtor-in-Possession Credit Agreement
dated as of September 25, 1995 (such agreement, as it may be
amended, amended and restated, supplemented or otherwise modified
from time to time, being herein called the "Credit Agreement";
capitalized terms used herein without definition shall have the
meanings assigned those terms in the Credit Agreement), by and
among WEI Holdings, Inc., a Delaware corporation, as debtor and
debtor-in-possession, Borrower, the lenders party thereto
("Lenders") and Bankers Trust Company, as agent for Lenders
("Agent").
This Note is one of Borrower's "Notes" in the aggregate
principal amount of $30,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement to which
reference is hereby made for a more complete statement of the
terms and conditions under which the Loans evidenced hereby were
or are made and are to be repaid.
___________________
[1] Insert in numbers the principal amount of Lender's Pro Rate
Share of the aggregate Commitments.
[2] Insert name of Lender in capital letters.
[3] Insert in words the principal amount of Lender's Pro Rata
Share of the aggregate Commitment.
All payments of principal and interest in respect of
this Note shall be made in lawful money of the United States of
America in same day funds at the office of Agent located at One
Bankers Trust Plaza, New York, New York, or at such other place
as shall be designated in writing for such purpose in accordance
with the terms of the Credit Agreement. Until notified in
writing of the transfer of this Note, Borrower and Agent shall be
entitled to deem Payee, or such person who has been so identified
by the transferor in writing to Borrower and Agent as the holder
of this Note, as the owner and holder of this Note. Each of
Payee and any subsequent holder of this Note agrees by its
acceptance hereof that before disposing of this Note or any part
hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make
notation of any payment made on this Note shall not limit or
otherwise affect the obligation of Borrower hereunder with
respect to payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be
due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of
interest on this Note; provided, however, that if the day on
which any payment relating to a Eurodollar Rate Loan is due is
not a Business Day but is a day of the month after which no
further Business Day occurs in such month, then the due date
thereof shall be the next preceding Business Day.
This Note is subject to mandatory prepayment as
provided in subsection 2.4A(ii) of the Credit Agreement and to
prepayment at the option of Borrower as provided in subsection
2.4A(i) of the Credit Agreement.
This Note is subject to restriction on transfer or
assignment as provided in subsections 10.2 and 10.15 of the
Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note may become, or may
be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in
the manner provided in the Credit Agreement.
No reference herein to the Credit Agreement and no
provision of this Note or the Credit Agreement shall alter or
impair the obligation of Borrower, which is absolute and uncondi-
tional, to pay the principal of and interest on this Note at the
place, at the respective times, and in the currency herein
prescribed.
Borrower promises to pay all costs and expenses payable
under the Credit Agreement, including reasonable attorneys' fees,
incurred in the collection and enforcement of this Note. Borrow-
er and endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand
and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense
to any demand hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed and delivered by its duly authorized officer, as of the
day and year and the place first above written.
WHEREHOUSE ENTERTAINMENT, INC.
as debtor and debtor-in-possession
By __________________________
Title:
TRANSACTIONS ON
NOTE
Date
Type of
Loan Made
This Date
Amount of
Loan Made
This Date
Amount of
Principal
Paid
This Date
Outstanding
Principal
Balance
This Date
Notation
Made by
EXHIBIT V
BORROWING BASE CERTIFICATE
[DATE]
Reference is made to the Debtor-in-Possession Credit
Agreement dated as of September 25, 1995 (such agreement, as it
many be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings set
forth in the Credit Agreement) by and among WEI Holdings, Inc., a
Delaware corporation, as debtor and debtor-in-possession ("Hold-
ings"), Wherehouse Entertainment, Inc., a Delaware corporation,
as debtor and debtor-in-possession ("Borrower"), the lenders
party thereto ("Lenders") and Bankers Trust Company, as agent for
Lenders ("Agent").
Pursuant to Section 5.1 (iii) of the Credit Agreement,
the undersigned [chief executive officer] [chief financial
officer/ treasurer/controller]* of Borrower hereby [certifies/
certify] that attached hereto as Annex A is a true and accurate
calculation of the Borrowing Base as of _______________, 199__
determined in accordance with the requirements of the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned [has/have] caused
this certificate to be duly executed as of _______________,
199__.
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-possession
By
__________________________________
Title:
By
__________________________________
Title:
______________________
* Certificate to be executed by chief executive officer
or any two of the chief financial officer, treasurer
and controller.
ANNEX A
TO BORROWING BASE CERTIFICATE
____________________, 199__
I. BORROWING BASE
1. Total merchandise Inventory $___________
(excluding rental Inventory)
(a) reserves taken by Borrower (___________)
(b) unicap costs (___________)
(c) Total Inventory less reserves
and unicap costs ___________
2. Less ineligible Inventory:
(a) Inventory located outside the
United States of America; (___________)
(b) Inventory produced in violation
of the Fair Labor Standards Act
or subject to the so-called
"hot goods" provisions contained
in Title 29 U.S.C. 215(a)(i); (___________)
(c) All Inventory held, or claimed
to be held on consignment or
similar arrangement. (___________)
(d) Total ineligible Inventory $___________
3. Total Inventory less ineligible
Inventory (I1(c) minus I2(d)) $___________
4. Eligible Inventory
(I3 multiplied by 65%) $___________
5. Percentage of Eligible Inventory to
be included in the Borrowing Base 50%
6. Borrowing Base (I4 multiplied by I5) $___________
II. APPLICABLE CREDIT EXTENSIONS
1. Aggregate principal amount of
outstanding Loans $___________
2. Letter of Credit Usage $____________
3. Total Utilization of Commitments
(II1 plus II2) $____________
III. EXCESS BORROWING BASE
(I6 minus II3) $____________
EXHIBIT VI
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are duly elected [Title] and [Title] of WEI
Holdings, Inc., a Delaware corporation, as debtor and debtor-in-
possession ("Holdings"), and Wherehouse Entertainment, Inc., a
Delaware corporation, as debtor and debtor-in-possession
("Borrower");
(2) We have reviewed the terms of the Debtor-in-Possession
Credit Agreement dated as of September 25, 1995 by and among
Holdings, Borrower, the lenders party thereto ("Lenders") and
Bankers Trust Company, as agent for Lenders (as such agreement
may be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings
assigned to those terms in the Credit Agreement), and we have
reviewed the terms of the Notes and the other Loan Documents and
we have made, or have caused to be made under our supervision, a
review in reasonable detail of the transactions and conditions of
Holdings and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) Except as described below, the examinations described
in paragraph (2) did not disclose, and we have no knowledge of,
the existence of any condition or event that constitutes an Event
of Default or Potential Event of Default during or at the end of
the accounting period covered by the attached financial state-
ments or as of the date of this Certificate.
Describe below (or in a separate attachment to this Certifi-
cate) the exceptions, if any, to paragraph (3) by listing, in
detail, the nature of the condition or event, the period during
which it has existed and the action which Holdings or Borrower
has taken, is taking, or proposes to take with respect to each
such condition or event:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
The foregoing certifications, together with the computations
set forth in Attachment No. 1 hereto and the financial statements
delivered with this Certificate in support hereof, are made and
delivered this _____ day of _________________, 199___ pursuant to
subsection 5.1(iv) of the Credit Agreement.
WEI HOLDINGS, INC.,
as debtor and debtor-in-possession
By: _________________________
Title:
By: _________________________
Title:
WHEREHOUSE ENTERTAINMENT, INC.,
as debtor and debtor-in-possession
By: _________________________
Title:
By: _________________________
Title:
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(The Certificate attached hereto is as of ________________ and
pertains to the period from _________________ to
________________.)
Capitalized terms used herein shall have the meanings
set forth in the Debtor-in-Possession Credit Agreement dated as
of September 25, 1995 by and among WEI Holdings, Inc., a Delaware
corporation, as debtor and debtor-in-possession, Wherehouse
Entertainment, Inc., a Delaware corporation, as debtor and debtor
-in-possession, the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders. Subsection references
herein relate to the subsections of the Credit Agreement.
A. MINIMUM CONSOLIDATED ADJUSTED EBITDAV
1. Consolidated Net Income $_____________
2. Provisions for taxes based on income $_____________
3. Consolidated Interest Expense $_____________
4. To the extent Consolidated Net Income
has been reduced thereby, amortization
expense, depreciation expense, the non-
cash portion of cost of rentals and
other non-cash expenses $_____________
5. Losses on Asset Sales $_____________
6. Other non-cash items reducing
Consolidated Net Income, excluding
write-offs of Inventory and accounts
receivable $_____________
7. The sum (without duplication) of
Line A1 through Line A6 $_____________
8. Gains on Asset Sales $_____________
9. Other non-cash items increasing
Consolidated Net Income $_____________
10. Cash purchases of rental inventory $_____________
11. The sum of (without duplication)
Line A8 through Line A10 $_____________
12. Consolidated Adjusted EBITDAV
(Line A7 minus Line A11) $_____________
13. Minimum Consolidated Adjusted
EBITDAV required by subsection 6.6A $_____________
B. MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures
amount set forth in subsection 6.6B
for the current fiscal period $_____________
2. Consolidated Capital Expenditures
amount set forth in subsection 6.6B
for the prior fiscal period $_____________
3. Consolidated Capital Expenditures
for the prior fiscal period $_____________
4. Unutilized Consolidated Capital
Expenditures for the prior fiscal
period (Line B2 minus Line B3) $_____________
5. Carryover Amount (the lessor of [25%
multiplied by Line B2] and Line B4) $_____________
6. Capital expenditures by Holdings and
its Subsidiaries for the current
fiscal period $_____________
7. Expenditures made with insurance
proceeds received by Borrower with
respect to any item included in the
property, plant or equipment reflected
in the consolidated balance sheet of
Holdings and its Subsidiaries for the
current fiscal period $_____________
8. Expenditures made with, or reimbursed
by, Consolidated Trade Reimbursements
for the current fiscal period $_____________
9. Consolidated Capital Expenditures for
the current fiscal period (Line B6
minus Line B7 minus Line B8) $_____________
10. Maximum Consolidated Capital Expendi-
tures permitted for the current fiscal
period by subsection 6.6B (Line B1
plus Line B5) $_____________
C. MAXIMUM INVESTMENTS
1. Investments outstanding pursuant to
subsection 6.3(v) $_____________
2. Maximum Investments permitted by
subsection 6.3(v) $_____________
D. MAXIMUM PAYMENTS ON PRE-PETITION
OBLIGATIONS
1. Payment on Prepetition Indebtedness
or other obligations existing on
Petition Date pursuant to subsection
6.5(ii)(e), measured on a cumulative
basis since the Closing Date $_____________
2. Maximum payments on Prepetition
Indebtedness or other obligations
existing on Petition Date permitted
pursuant to subsection 6.5(ii)(e) $ 2,500,000
EXHIBIT VII
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
DATE ____________, 19___
Reference is made to the Agreement described in Item 2 of
Annex I annexed hereto (as amended, amended and restated, supple-
mented or otherwise modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with [ASSIGNOR] (the "Assignor") and [ASSIGNEE] (the
"Assignee") agreeing as follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor,
that interest in and to all of the Assignor's rights and obliga-
tions under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Item 4 of Annex I
of all outstanding rights and obligations under the Credit Agree-
ment relating to the facilities listed in Item 4 of Annex I,
including, without limitation, such interest in the Assignor's
Commitments (if applicable), the Loans owing to the Assignor and
participations in outstanding Letters of Credit relating to such
facilities. After giving effect to such sale and assignment, the
Assignee's Commitments, the amount of the Loans owing to the
Assignee and participations in outstanding Letters of Credit will
be as set forth in Item 4 of Annex I.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim created by the Assignor; (ii) makes no representation or
warranty and assumes no responsibility with respect to any state-
ments, warranties or representations made in or in connection
with the Credit Agreement regarding the execution, legality,
validity, enforceability genuineness, sufficiency or value of the
Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial
condition of Borrower or the performance or observance by
Borrower of any of its obligations under the Credit Agreement or
any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial
statements referred to therein, and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and
Assumption; (ii) agrees that it will, independently and without
reliance upon Agent, the
Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an eligible
assignee pursuant to subsection 10.2 of the Credit Agreement;
(iv) appoints and authorizes Agent to take such action as agent
on its behalf and to exercise such powers under the Credit
Agreement and other Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably
incidental thereto; [and] (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by its
as a Lender [; and (v) attaches the forms prescribed by the
Internal Revenue Service of the United States withholding taxes
with respect to all payments to be made to the Assignee under the
Credit Agreement, such other documents as are necessary to
indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty or a letter certifying
that Assignee is not entitled to any such exemption or reduced
rate].*
4. Following the execution of this Assignment and Assump-
tion by the Assignor and the Assignee, it will be delivered to
Agent for acceptance and recording by Agent. The effective date
of this Assignment and Assumption shall be the date upon which
(i) this Assignment and Assumption has been executed by the
Assignor and the Assignee and (ii) the applicable conditions
contained in subsection 10.2 of the Credit Agreement have been
satisfied unless another date is specified on Item 6 of Annex I
hereto (the "Settlement Date").
5. Upon such acceptance and recording by Agent, as of the
Settlement Date, (i) the Assignees shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in
this Assignment and Assumption, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and
after the Settlement Date, Agent shall make all payments under
the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal,
interest and commitment fees (if applicable) with respect there-
to) to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor the principal amount of any outstanding
Loans and obligations in respect of Letters of Credit under the
Credit Agreement which are being assigned hereunder, net of any
closing costs. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement
for periods prior to the Settlement Date directly between
themselves on the Settlement Date.
_________________________
* If the Assignee is organized under the laws of a juris-
diction outside the United States.
7. This Assignment and Assumption shall be governed by,
and construed in accordance with, the internal laws of the State
of New York, without regard to conflicts of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption to be executed by their respective
officers thereunto duly authorized as of the date first above
written, such execution being made on Annex I hereto.
Accepted this ____ day
of ______________, 19__
BANKERS TRUST COMPANY,
as Agent
By ______________________
Title:___________________
[NAME OF ASSIGNOR]
as Assignor
By ______________________
Title:___________________
[NAME OF ASSIGNEE]
as Assignee
By ______________________
Title:___________________
ANNEX I
1. Borrower: Wherehouse Entertainment, Inc., as debtor and
debtor-in-possession
2. Name and Date of Credit Agreement: Debtor-in-Possession
Credit Agreement dated as of September 25, 1995 by and among
WEI Holdings, Inc., as debtor and debtor-in-possession,
Wherehouse Entertainment, Inc., as debtor and debtor-in-
possession, the lenders party thereto and Bankers Trust
Company, as agent
3. Date of Assignment Agreement: _________________, 19____
4. Amounts
(As of Date in Item #3 above):
Facility 1 Facility 2
(Commitment) (Letter of
Credit partici-
pations)
a. Total Credit Agreement
Commitment/Letters of
Credit $__________ $___________
b. Assigned Share* __________% ___________%
c. Amount of Assigned
Share $__________ $___________
5. Assignee's Aggregate
Letter of Credit/Commitment
Amount: $__________
6. Settlement Date** _____________, 19___
_____________________
* Percentage taken to 12 decimal places.
** This date should be no earlier than the date of
acceptance by Agent.
7. Notice:
ASSIGNOR:
_____________________
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
_____________________
_____________________
_____________________
_____________________
Attention:
Reference: